So, what’s happening at Dreams?

From the winter months of 2012 through to the spring of the following year, this was the one question the Furnishing Report was asked more than any other.

Now, more than two years on from the pre-pack sale to Sun, if the question comes up it is no longer piqued by fear (suppliers) or greed (retailers).

Dreams is in good health once more.

mikeLogueThe business will make the best part of £14m at the EBITDA line on sales around £220m in 2015 if the year continues as it has begun, according to its CEO Mike Logue (right).

That would represent a doubling of profits and a circa £20m uplift in sales, with Mr Logue saying it has delivered double-digit growth on top of double-digit growth so far this year.

He quotes like-for-like figures, which are currently higher than the total sales growth figure, as Dreams — until now — has continued to be a net closer of retail space.

After a lengthy hiatus, Dreams began opening stores again in March 2014, with the first being a smaller-format shop in Warrington in North West England.

Relocations of existing stores have been a focus, including finding more appropriate properties — in terms of both size and location — and also in reducing rent.

There were nine store relocations in 2014 and there have been a further four in 2015 so far. It is currently trading from 158 stores but, says Mr Logue, Dreams will now grow the estate whilst simultaneously continuing to invest in existing stores.

dreamsSolihull1The final 80 or so are due to be refurbished by the end of 2015 with Dreams keen to take the learnings from its Easter launched new concept store at Solihull, and transfer and implement successes across the remaining stores to be revamped.

Mr Logue says store numbers could reach 175 by the year’s end, with the North East, North West, and Scotland all target areas as well as looking to address untapped parts of the South East, including the fact “we only have one store in Central London.”

Of the North East, he says its relationship with Sunderland headquartered ScS — also acquired by Sun European in relatively similar circumstances to Dreams — could prove fruitful.

dreamsSolihul2“We share knowledge with one another — as we do with Sharps (also owned by Sun) — and knowing where other group businesses are performing well is very useful.”

Its relationship with Sharps is more outwardly evident, however, with the cabinet furniture retailer trading from a number of concessions in Dreams stores and its mattresses featuring in Sharps product literature.

Since joining in the summer of 2013, Mr Logue has consistently talked of reducing average store sizes. “We believe our ideal store footprint is 7,000sqft. Our average was 11,000sqft but that has now come down to around 9,000sqft,” he says.

Still work to do, then, and to achieve it Dreams will have to be creative. Mr Logue says that around 50 of its legacy stores are larger than required. However, they still trade very successfully, and rather than be candidates for relocation or closure, he says Dreams will look to find other ways to maximise the available space.

dreamsSolihull3With that in mind, a number of pilots and tests are ongoing. Floorcoverings are being sold in some shops, while a Dreams At Home store — in partnership with independent retailer and sourcing firm Sabichi — will launch with a more comprehensive home furnishings offer at a store in Hertfordshire in the coming weeks.

There are no rollout plans for either at present.

More set in stone are plans to develop and expand its bedding offer, with Dreams own-branded bedding a big focus for the next year.

“We deliver to around 500,000 homes a year and less than 10 per cent buy our bedding. As a specialist bedroom retailer it would be inconceivable for us not to address that,” he says.

Dreams Bedding will comprise top-end thread counts at leading prices in plains such as whites and creams, he adds.

“We’d like to double that business within the next 12 months.”

Concentrating on its core mattress offer was an initial focus when Mr Logue joined, and with much of that work already done, including taking a third out of an “over-complicated and over-ranged offer,” attention has turned to bed frames, with new timber, fabric and metal bedsteads introduced.

He says bedsteads are trading 45 per cent ahead year-on-year, albeit from a — no pun intended — low base. The bed frames programme was in need of an overhaul with the range being symptomatic of a once-high return rate for the chain, he says.

“The returns rate when I joined the business was 13 per cent and bedframes were a large part of that. On some products from China, the returns rate was 30 per cent. We invested £1m in a quality team both here in the UK and in southern China, and in 2015, we are now tracking returns at below 5 per cent.

“You can imagine what a difference that makes to profitability.”

He says the firm’s own production — at its Midlands factory in Oldbury — is also now more efficient, with the plant having moved to one shift instead of three and managing to maintain the same level of output.

“Previously, we were manufacturing by depot, making for Cumbernauld and then High Wycombe and so on, but now we are making product in bulkier quantities of certain products and it is much more efficient.

The factory is excellent at making open-coil mattresses and is and will continue to be a very important part of the business.”

Photographs: From the top, Mike Logue, CEO at Dreams and then selected images from the firm’s new Solihull showroom, which opened at Easter.