Q4 trading update, 13 weeks ending 25th June 2022 Full year sales £1,552m, +16% YoY (+47% 2YoY), with Q4 sales of £358m, -6% YoY (+90% 2YoY). Consensus expectations for FY22 sales were £1,550m (+16%YoY) and discrete FY22 Q4 sales at £355m (-6.5% YoY). This follows quarterly sales growth of Q1: +8.3% YoY (+48.1% 2YoY), Q2: +12.9% YoY (+26.2% 2YoY), Q3: +69% YoY (+40% 2YoY). Q4 comparatives were tough on a one-year basis – given re-opening of stores following closures in Q3 last year. However, comparatives were soft on a two-year basis, with sales down 28.6% YoY in Q4 FY20 when stores were closed in the period. Full year gross margins are broadly in line with expectations at 51.2%, -40bps (H1: +80bps, Q3: +30bps) implying Q4 gross margins of c. -350bps against tough comparatives - gross margins were +460bps in Q4 last year after Dunelm delayed its Summer Sale into Q1 FY22. Outlook Management expect FY22 PBT of £207m – broadly in line with consensus expectations, and trading in the first half of July has been “solid”. Management is mindful of inflationary pressures and now expects gross margins to return to their long run average in FY23 (c. 50%). Our View Q4’s performance shows resilience as does current trading - clearly Dunelm is winning market share which points to a strong proposition. While margin pressures are being factored into consensus forecasts, we still believe that top line sales growth expectations look demanding with consensus expecting a further c. 4% to 5% p.a. growth (FY22 - FY24 CAGR) on top of exceptionally high growth in FY21 and FY22. However, the valuation - now on 10.9x FY23E PE - implies material downgrades which may prove too pessimistic.