British retailer Dunelm's third-quarter online sales jump drives revenue growth

(Reuters) - British retailer Dunelm Group Plc (DNLM.L) said on Thursday total like-for-like sales grew 4.6 percent in the third quarter as online sales jumped.

Shares of the company rose 6.5 percent in early trading on the London Stock Exchange.

Sales on Dunelm.com surged 35.7 percent in the third quarter, while like-for-like store sales rose 1.2 percent compared with a 4.3 percent drop in the year-earlier quarter.

However, the bedding and kitchen equipment retailer said its margins fell 15 basis points in the third quarter, as it integrates its business with rival Worldstores acquired in late 2016.

Core Dunelm margins were down 95 basis points in the third quarter, partly due to a one-time phasing benefit in the year-ago quarter from retail price increases, but the company said gross margins would improve in the final quarter.

The company warned in January that weakness in the legacy Worldstores business and continued investment in infrastructure would lead to higher operating costs.

Total revenue rose 5.1 percent to 268.2 million pounds in the 13 weeks to March 31 and the company said its expectations for the full year remained unchanged.

(Reporting by Rahul B in Bengaluru; Editing by Amrutha Gayathri)