Stronger Together

LOOKING AHEAD

The fundamental strengths of Dunelm, which were so evident during our response to the Covid-19 crisis, have underlined our confidence in our ability to deliver our strategic ambitions, which will create value for all our stakeholders. As a Customer 1st , digitally enabled business, we shall reinforce our leadership of the homewares sector in the UK, integrating our store network with our enhanced digital capabilities, supported by the strength and breadth of our product range, developed in partnership with our suppliers. We have also renewed our ambitions to continue making a substantial contribution to our communities, to improving the sustainability of the materials we use, to encouraging recycling, and to reducing our carbon footprint. We are confident that Dunelm will deliver another strong performance in the coming year, whatever circumstances may be thrown at us, building on our customerfocused business plans, together with the agility to adapt to the unfolding economic and consumer environment. It is impossible to predict our immediate financial outlook, but we look to the future with confidence and great ambition. “The fundamental strengths of Dunelm, which were so evident during our response to the Covid-19 crisis, have underlined our confidence in our ability to deliver our strategic ambitions, which will create value for all our stakeholders.”

Andy Harrison Chairman

10 September 2020

SEE PAGES 90 TO 91 SECTION 172 COMPANIES ACT CASE STUDY FOR OUR RESPONSE TO THE COVID-19 CRISIS AS A PRACTICAL EXAMPLE OF HOW THE BOARD AND EXECUTIVE TEAM EXERCISED THEIR DUTIES UNDER S172 COMPANIES ACT 2006 DURING THE HEIGHT OF THE CRISIS.

MAKING STRATEGIC PROGRESS WHILST NAVIGATING THE COVID-19 CRISIS

£64.6M SPECIAL DIVIDEND PAID reflecting strong performance in FY19

NEW DIGITAL PLATFORM LAUNCHED successful phased rollout of digital platform

JULY AUG SEPT Q1 2019/20 JULY AUG SEPT

JULY 2019 • New season launches and ongoing digital and brand marketing investment.

AUGUST 2019

Phased transfer to new platform.

SEPT 2019 • The Edwards family features in latest ’Home of Homes’ campaign launched across TV, social and digital channels. • New Point of Sale till system rolled out across stores.

Q2 2019/20

OCT NOV DEC

OCTOBER 2019 • Full transition to new digital platform. • Click & Collect proposition launched.

DECEMBER 2019 • Unscheduled trading update as full year profits expected to be ahead of previous expectations. • Boris Johnson wins UK ‘snap’ general election. • UK leaves European Union. ALL CUSTOMER-FACING OPERATIONS CLOSED following UK Government lockdown announcement

RECORD PEAK TRADING SEASON with stores and new website hosting more customers than ever before

Q3 2019/20

JAN FEB MAR

JANUARY 2020 • Successful Winter Sale. • World Health Organisation declares global emergency due to Covid-19. FEBRUARY 2020 • Channel 4’s First Dates programme sponsorship starts. • First Covid-19 case transmitted in UK. • Interim results show progress against all key customer, operational and financial metrics. MARCH 2020 • UK Government announced national lockdown and new social distancing rules. • Dunelm focused on preserving cash and draws down RCF in full. • Interim dividend cancelled. • Capital expenditure and non-essential operating costs reduced. • Worked closely with suppliers to manage stock requirements. • Liaised with landlords to improve rent payments schedule.

PHASED RE-OPENING OF ONLINE SERVICES prioritising the safety of our colleagues and customers APRIL APRIL 2020 re-opening. confirmed. MAY 2020 JUNE 2020 CLICK & COLLECT RELAUNCHED including new ‘contactless’ offer for customers

NEW EDIT STORE OPENS trial of smaller high street format store in Crawley

STORES START RE-OPENING phased opening to ensure safety and compliance with local

MAY JUNE

• Prepared stores and engaged with colleagues for • Colleagues support local communities and NHS. • COVID Corporate Financing Facility (CCFF) eligibility • Pay reductions taken at Board and Executive Board levels. • UK social distancing rules extended. • Homewares stores included on ‘permitted’ retailers list. • Trials of ‘dark store’ Click & Collect offer commenced. • Phased re-opening of stores in England with new social distancing measures in place. requirements Q4 2019/20 • FY total revenue down 3.9% year-on-year. • FY profit before tax £109.1m. • Final stores in Wales allowed to open on 22 June. • Covid-19 spike in Leicester triggers local lockdown. PHASED REOPENING OF PAUSA CAFES with UK Government VAT reductions passed on to Dunelm customers HOMEWARES TO GROWTH market grew by 11.7% over June and July Q1 2020/21

JULY 2020 response since re-opening. cafes. announced. • Sales in July up 59% year-on-year.

AUGUST 2020 scheme.

SEPTEMBER 2020

MOVING ANNUAL TURNOVER £M

1,150

MARKET RETURNS

JULY AUG

• Dunelm’s third gender pay report published. • Trading statement highlights positive customer • UK Government reduces hospitality VAT rate and launches Eat Out to Help Out Scheme. • VAT reduction passed on to customers in Pausa • £250 special thank you payment for all colleagues • Pausa cafes take part in Eat Out to Help Out • Sales in August up 24% year-on-year. 1,100 1,050 • Preliminary announcement highlights strength of trading for first nine weeks of FY21.

LISTENING, LEARNING AND EMERGING AS A STRONGER BUSINESS

EMPOWERED COLLEAGUES AND FLEXIBLE WORKING

WHAT WE LEARNED DURING THE CRISIS • Colleagues felt more empowered while continuing to respect

Dunelm’s shared values.

Across the business we experienced a greater sense of mutual trust.

Colleagues were flexible, prepared to take on dual roles, and become more engaged in local community activities. £250 We made a special thank you payment to every colleague to acknowledge their contribution WHAT WE LEARNED DURING THE CRISIS • Weekly communications with our CEO were valued highly – in particular the two-way Q&A session. understanding colleague sentiment and safety. communication via social media was effective and appreciated. 8.2/10 Average score from our colleagues about how safe they felt to return to work HOW WE WILL EMERGE STRONGER TOGETHER • Recognise colleague demand for more flexible working and transient roles.

Review colleague understanding of our shared values post-crisis. Rethink job descriptions and geographical boundaries to reflect mutual trust and widen access to

internal talent.

2 days

In just two days after closing, our customer care and support centres were up and running again, with

BETTER COMMUNICATIONS AND LISTENING MECHANISMS

New ‘pulse’ surveys proved vital to Targeted local customer colleagues working from home HOW WE WILL EMERGE STRONGER TOGETHER • Focus on more interactive and personal colleague communication.

Continue weekly ‘pulse’ surveys to track colleague concerns – we have already expanded these to all hourly-paid colleagues.

Refocus brand marketing expenditure from national to local

campaigns.

8,000

Peak number of colleagues watching weekly CEO communications

During the Covid-19 crisis we learned how adaptable we were and what made our business resilient. We listened more to our colleagues and communities, and acted upon this insight. We recognised the value of empowerment, communication and relationships. We learned from our experience and emerged stronger together.

GREATER UNDERSTANDING OF COLLEAGUE WELLBEING

WHAT WE LEARNED DURING THE CRISIS • Government guidelines prompted us to gain new insights into our most vulnerable colleagues.

Hundreds of colleagues showed interest in our support fund, and wellbeing information hub and app.

Benefits of understanding personal circumstances better and the

‘indivisibility’ of social life and work life when working from home.

5,000

Of our store colleagues have received Mental Health Awareness training to date WHAT WE LEARNED DURING THE CRISIS • Value of ‘instant’ feedback relating to local customer sentiment and store-by-store opening decisions. engagement for colleague wellbeing (‘sense of purpose’) and teamwork (cross-company activities and charitable work). engagement to the Dunelm brand. 65,000 Gowns manufactured for the NHS when we re-opened our manufacturing centre to support them HOW WE WILL EMERGE STRONGER TOGETHER • Continue to monitor, measure and protect our most vulnerable people.

Expand and promote our colleague support fund and Retail

Trust resource.

Strengthen initiatives to promote our colleagues’ physical, emotional and financial wellbeing.

16%

Of our colleagues are vulnerable, high-risk vulnerable (HRV), or care for

IMPORTANCE OF COMMUNITY ENGAGEMENT AND KNOWLEDGE

Importance of heightened community

Importance and value of community other HRV household members HOW WE WILL EMERGE STRONGER TOGETHER • Allow our colleagues to communicate directly with local stores’ customers.

Provide tailored, more meaningful communication to communities near our stores.

Increase overall Dunelm brand awareness by representing our brand more meaningfully within

our local communities. 173 Facebook groups set up and managed by our store colleagues, improving local engagement

DUNELM AT A GLANCE

A Customer 1st, digitally enabled business

We are the UK’s #1 homewares retailer, home to over five million visitors to our stores and website a week, with a growing presence in the furniture market.

OUR EFFICIENT STORE ESTATE AND FULFILMENT NETWORK Our 173 stores allow us to showcase our product ranges and inspire our customers as they browse. Our in-store colleagues provide valued customer service and build local, helpful relationships. In FY20 we added three stores to our estate and are committed to open three stores in FY21. Our stores are supported by an efficient fulfilment network, which also serves our growing home delivery services.

Superstores

Manufacturing Centre

Customer Care Centre

SC

DN

D Support Centre

Dunelm Home Delivery Network Hubs

Distribution Centres

173

TOTAL NO. OF STORES mainly out of town, with many offering made- to-measure blind, curtain, shutter and accessories fitting services. DUNELM

148

PAUSA CAFES offering a wide range of food and drink, including freshly ground coffee. 1 DEDICATED CUSTOMER

10,000

COMMITTED

Opened

SMALLER EDIT STORE OPENED with curated Live, Sleep, Eat and Work/Do ranges.

5

HOME DELIVERY NETWORK HUBS

COLLEAGUES CARE CENTRE currently operated remotely by colleagues working from home, providing ‘on call’ service.

CC

DN D

DN DN

SC M

DN

SC

DN

50,000

TOTAL NO. OF PRODUCT LINES

2

DISTRIBUTION CENTRES with combined area of over one million square feet.

2

SUPPORT CENTRES assisting our store, digital and delivery colleagues.

OUR GROWING SERVICE OFFER We are developing a ‘total retail system’ – a fully integrated online and in-store service supported by a robust network of customer-facing services, and infrastructure.

UPGRADED CLICK & COLLECT services with easy options for returns, and a store-to-car pick-up service. VIRTUAL SHOPPING SERVICE trialling virtual shopping via interactive video calls.

ONLINE GUIDES providing advice on measuring, fitting and sustainable living.

IN-HOME BLIND AND CURTAIN FITTING SERVICES with virtual consultations available via video conference or in store. OUR EXCLUSIVE BRANDS We have the largest in-store range of homeware and furniture products in the UK, including a number of specialised brands, exclusive to Dunelm. IMPROVED HOME DELIVERY OPTIONS with one and two-man delivery options.

c.4 million

deliveries in FY20

Our Dunelm brand is recognised for providing a distinctive and specialist product portfolio, based on choice, quality, value and style.

Our made to measure service allows customers to create bespoke curtains, blinds, shutters and accessories with expert help. All accessories are available to purchase at dunelm.com or in store. With over 100 years as master pillow and quilt makers, Fogarty has grown into one of the country’s leading bedding brands. EVERYDAY SUSTAINABILITY We are making sustainability an everyday part of our business, finding our own way to make the biggest difference.

The Dorma brand was established in 1921. Our Dorma range includes LIMITED EDITION bedding, curtains, cushions and homewares. CELEBRATING 100 YEARS OF STYLE PEO P LE

N T E NVIRON M E P R O DUCT

SUSTAINABILITY REVIEW P32