Dreams, Britain’s leading bed specialist, announces full year results for the 52 Weeks to 24 December 2015
- Another strong year of growth
- Delivering against strategic initiatives
Dreams Ltd. financial Highlights
- Revenue + 16.2% to £234.2m (FY14: £201.6m)
oTotal LFL sales up 19.4% (FY14: 7.8%)
oE-commerce sales up 41% (FY14: 18%), traffic +30%
- Group Adjusted EBITDA* £21.1m (FY14: £6.9m) +207% or 3x increase vs. FY14
- Underlying operating profit** £14.9m (FY14: £1.3m)
- Profit before tax £13.1m (FY14: £0.4m)
- Strong free cash flow of £13.9m (FY14: £(3.4)m)
*EBITDA is earnings before interest, tax, depreciation and amortization and is stated pre-Exceptional items, management fee and currency movements.
**Operating profit is stated pre-exceptional items, management fee and currency movements. Exceptional items include one-off/nonrecurring costs including refinancing and restructuring costs
- Three-year plan (launched 2014) progressing ahead of plan: every store refurbished, every home delivery van replaced, factory benefiting from new investment.
- Quality of products continually improved resulting in reduced returns.
- Launch of “Replace Every 8” campaign with £4m media investment
- Customer satisfaction levels continuing to improve, 83% “highly satisfied” (FY 2014: 77%)
- Deliveries to 500,000 homes in the year
Mike Logue, CEO, said
“These strong results demonstrate the success of our strategic initiatives: continuing to manufacture and provide the highest quality products, broadening our brand appeal, re-sizing and re-furnishing our store estate, improving customer service and providing a seamless multi-channel proposition.
“With a clear roadmap now in place for the next phase of the Dreams journey, and our desire to continue to improve everything that we do, we believe the opportunity is both exciting and significant. This coupled with our outstanding team of colleagues means that we look to the future with even greater confidence.”
2015 was another year of strong growth for Dreams, driven by our clear strategy of investing in our people, products and systems.
The three-year turnaround strategy we launched in 2014 is progressing ahead of plan. Every Dreams store has now been refurbished, at a total cost of £5m. The positive response from our customers to this investment resulted in sales per square foot increasing 21% (+32% over the last two years). As at year-end, the total estate comprised 170 stores, compared to 157 in 2014.
Ongoing investment in improving our e-commerce platform continues to deliver results. Online channel sales grew 41% in 2015, with traffic to our site up 30%. More than 50% of online traffic is now coming via our improved mobile site, which has seen a 40% increase in conversion rates over the last two years.
We have also invested significantly in manufacturing and distribution. Our factory in Oldbury is benefiting from new equipment, a restructured team and much simplified processes. As a result, we are delighted to report that the factory is now making a significant contribution to the group’s overall profit. 100 home delivery vans have now been replaced, at a cost of £2m.
We continue to listen to our customers and our team to enhance the Dreams offer. Ongoing improvements in product quality have resulted in reduced returns and cancellation rates. Customer satisfaction continues to improve, with 83% of the 100,000+ customers that have provided feedback through our Pillow Talk programme “highly satisfied” (77% in 2014). We were delighted to award pay increases for our staff for the second consecutive year.
Current Trading and Outlook
Whilst the high street remains competitive, we are delighted with the trading performance of the business, with the results of our strategic initiatives continuing to bear fruit. LFLs in the second half of the year grew 30% year-on-year and we have seen that growth rate continue into this year.
We are delighted at our progress in the first two years and have now identified further opportunities to build on these strong foundations and ensure Dreams fulfils its long-term potential.