Bed retailer Dreams has bucked the downturn to achieve pre-tax operating profits up 36% to a record £18.4m last year as it drove costs down and benefited from economies of scale.
EBITDA soared 32% to £25.1m at the 240-store retailer, while revenue shot up 23% to £280m in the year to December 24. Like-for-likes increased 3.8%.
Dreams’ performance sets it apart from that of big-ticket rivals such as collapsed Land of Leather and MFI. Others have closed stores and just last month Carpetright issued a profit warning. The performance was against tough comparatives - in the previous year its turnover grew 16% to £194m.
Chief executive Nick Worthington told Retail Week he also expects “double-digit growth in sales and profit” for the current year.
The retailer expanded aggressively in the period, opening 44 shops. It plans to open a further 45 this year, with 180 locations identified where it could have a presence.
“There is clearly scope to grow across the country,” said Worthington. “We are not represented in the Northeast or the Southwest.”
He added that “enhanced economies of scale” allowed the retailer to drive down costs, and that increases in production and distribution efficiency resulted in profit growth that “significantly outstripped” sales growth.
“Although we enter this year with cautious expectations, we expect another strong year despite political uncertainty. We’ll come out of the downturn stronger and leaner than at any point in ourhistory,” Worthington said.
He said the retailer had continued to grow market share in the period, as shoppers traded down to Dreams’ “middle mass market” proposition in the recession.
He added that while “everybody felt the pinch” with the snow at the start of the year, as well as the VAT changes, February and March were “very strong, which has put us back in line. We had a good Easter too. The UK consumer is more resilient than people give them credit for”.
Dreams has tweaked its store format to “enhance the in-store experience”, with improvements made in display areas, volume of product and roomsets.
The bed specialist has also introduced a body-mapping facility in 50 stores. Customers are scanned while lying on a bed and staff can offer the most suitable product.
Dreams was founded in 1987 by Mike Clare, who then sold it to Exponent in 2008 for more than £200m.