Homeware retailer Dunelm keeps outlook steady amid strong sales of winter goods

By Muhammed Husain

(Reuters) -Dunelm stuck to its annual outlook on Thursday despite a dip in quarterly sales and a challenging backdrop, as struggling customers scoop up goods to help them prepare for painful energy prices as winter approaches.

British shoppers are stocking up on electric blankets, candles and energy-efficient slow cookers as surging gas bills and record food price inflation force millions of people to prepare for a tough winter.

Dunelm, which runs more than 170 stores and a digital platform, said it was seeing a "very good response" from customers to its seasonal "winter warm" products, which also include duvet covers, blanket hoodies and sheepskin rugs.

The British group reported sales of 357 million pounds ($400.30 million) for the 13 weeks ended Oct. 1, down 8% from the previous year, when pent-up demand and strong summer sales had buoyed its performance. Sales were 36% higher than pre-pandemic levels.

"As we enter what will clearly be a challenging winter for consumers, our absolute focus remains on making every pound counts for everyone, through a tight grip on operations," Chief Executive Officer Nick Wilkinson said.

He added the group, which had raised retail prices this year to battle cost pressures, was nonetheless trying to support customers adapting to the economic backdrop.

Analysts at RBC Capital Markets and JP Morgan said Dunelm's first quarter update was softer than expected. The company's quarterly sales were 7% below RBC's forecast but above average market expectations, the brokerage said.

Shares in the group, which started selling ready-made curtains more than four decades ago and went on to become one of the UK's largest homeware stores, were 2.6% lower by 0745 GMT, compared with a drop of 0.12% in the FTSE 100 index.

"Overall with the shares having outperformed peers in recent weeks, we do not think today’s update will be enough to provide a further lift to the shares," JP Morgan wrote in a note.

Dunelm expects annual pretax profit to come in line with market forecasts of about 178 million pounds.

($1 = 0.8918 pounds)

(Reporting by Muhammed Husain in Bengaluru; Editing by Subhranshu Sahu and Gerry Doyle)