Dreams’ turnover increased by +2.2% to £395.4m for the 52 weeks ended December 2023, marking a "continued impressive performance" over the year, driven by investments in production and distribution, and improved customer satisfaction rates.
The retailer's reported turnover increase was underpinned by +4.4% LFL order growth and continuous market share gain, which was partially offset by the significant delivered sales bounce-back experienced after the Covid-19 pandemic in FY22.
Underlying EBITDA before currency movement rose to £59m (from £58m in FY22) while gross margin as a percentage of sales increased by +1.1% to 53.7%. This growth was despite a tough market backdrop impacted by inflationary headwinds and a decline in consumer spending.
FY23 marked a record year of capital investment for Dreams, as the company continued to modernise its store experience, supply chain and technology. Improvements achieved across the business include opening its largest DC to support faster deliveries within the Midlands area, opening four new stores, and ongoing store refits.
The business also undertook a series of upgrades to its technology systems and invested in new machinery in the Dreams Bed Factory (DBF), while also rolling out more energy-efficient vehicles for its delivery drivers. Despite being a record year for brand and capital investments, Dreams’ free cashflows grew compared to FY22.
Dreams has continued to expand its store portfolio in 2024, having opened two new stores and refitted 22 since January 2024, and is targeting further openings by early 2025 through accelerated opening programme while continuing to refit its core portfolio.
In June this year, Dreams marked another milestone in its growth strategy by opening a new distribution warehouse in Gartcosh, to increase its stock capacity by +30% with a view to improving product availability and reducing lead times for customers in Scotland.
During FY23, the manufacturing unit in Oldbury continued to excel, achieving a +9% increase in mattress production volumes while maintaining industry-leading quality metrics. The business also refreshed over 90% of its own product ranges, the biggest launch of newness in the last five years.
2023 saw Dreams being recognised by the National Bed Federation (NBF), with the retailer winning the National Bed Retailer of the Year award for the third consecutive year. Judges cited "the impressive uptick in sales, the increased support of the NBF and the ongoing relentless focus on the customer".
Customer satisfaction metrics also increased in 2023. Pillow Talk (Dreams’ customer feedback process) satisfaction rates increased by +1.7% to 89.6%, and hit the milestone of 70,000 reviews on Trustpilot, boasting a score of 4.8.
The business also continued to innovate during this period and launched a digital version of Dreams’ famous Sleepmatch experience, making it available to customers via Dreams’ website for a "seamless" omnichannel offering. Sleepmatch is an innovative 3D fit technology bespoke to Dreams stores that measures customers’ sleep and support needs, helping them find the mattress that best suits them.
Dreams also unveiled a multichannel brand campaign featuring actress Gillian Anderson. The 'Think what a Dreams bed could do for you' campaign, launched in October 2023, has driven up footfall to stores, lifted top of mind and delivered strong quality and trust metrics. This campaign has continued to drive brand awareness over the past nine months, most notably with new TV adverts featuring Gillian Anderson alongside British Olympic and Paralympic athletes, invigorating Dreams’ role as Official Sleep Partner of Team GB and ParalympicsGB.
In the build-up to Paris 2024, March 2023 saw Dreams tap into a number of incoming and growing trends with the launch of a Dream Team Gold mattress range, manufactured by DBF, broadening its manufacturing capabilities and adopting new technologies to meet changing consumer demand.
In March this year Dreams launched the Tempur Pro Air SmartCool range, and sales of the new range have exceeded expectations.
Jonathan Hirst, CEO of Dreams, says: "Our strong performance is a testament to the strength and resilience of the Dreams business and brand. By staying focused on delivering expertly crafted beds and mattresses and best-in-class customer service, we've maintained growth against challenging market conditions.
"The last FY was a record year of investment for us and we made significant upgrades across our business which will set us up for success. Moving forward, we will continue to expand our store estate and invest in in-store experience, manufacturing operations and in our exceptional colleagues, who remain at the heart of our success. I’m confident that Dreams will continue be the UK’s most-loved bed retailer, be first choice for customers across the UK and continue to go from strength to strength."
