Yahoo Finance Dunelm cheers investors despite cautious outlook
British home furnishings retailer Dunelm is “cautious about the months ahead” due to consumer uncertainty, despite announcing a growth in sales.
The homeware chain reported that like-for-like sales in its stores, which exclude those open for less than a year, rose 1.3pc for the 13 weeks to Sept 29.
Overall like-for-like sales were up 4.2pc, helped by increased online demand and a tighter focus on its core website and home-furnishings products.
Shares opened 8.7pc up, to the highest level in 20 weeks, and settled more than 5pc up at £5.72 by early afternoon.
Dunelm said its website continued to “grow strongly”, with online revenue jumping 33.3pc.
It has invested heavily in its online business in recent years, including the acquisition of online rival Worldstores.co.uk, Kiddicare and Achica.com, all of which have now closed following the transfer of around 20,000 lines onto Dunelm.com.
Starting this year with a lighter portfolio, and the business under one brand, Dunelm managed to improve its gross margin by eliminating poor-performing Worldstores.
Total revenue stayed flat at £248.2m; however, excluding Worldstores it grew 5.8pc.
“Our positive like-for-like growth highlights the strength of our customer offer, which we are continually working hard to improve as we focus on our core business again under one brand, with one platform and one supply chain,” said Nick Wilkinson, chief executive.
Mr Wilkinson, who replaced ousted former Monsoon boss John Browett earlier this year, added that the company was continuing to improve its online and reserve and collect services, as well as rolling out tablet-based selling in store.
Taken together, this multichannel revenue accounted for 14.8pc of revenue in the quarter.
Emily Stella of GlobalData, said: “[The first quarter] paints a far better picture for Dunelm than the last financial year, and suggests the homewares market leader is emerging from the commotion that the Worldstores acquisition caused the business.”
Ms Stella added that with rivals such as Ikea opening a handful of small-format stores on the high street, “the competition is tough, as are market conditions”.
Improved functionality for Dunelm.com will start to be tested in early 2019, providing customers with a wider assortment under a sole digital platform.
The FTSE 250 company opened its first shop in 1984 and currently operates 172 stores across the UK.
