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Dunelm sales expected to jump after customers redecorate during lockdown

·2-min read

Dunelm is set to confirm that sales surged by more than a quarter over the past year despite store closures, as locked-down customers spruced up their homes.

The homeware and soft furnishing retailer has been a significant beneficiary of lockdown trends, with more people seeking to redecorate their homes after being cooped up in the properties for the past 18 months.

However, shares in the company have lost steam in the past 12 months, dropping by 15% as shareholders became accustomed to the group’s strong trading growth.

In its latest update to shareholders, the company said it expected it would post 26% sales growth for the year to June.

Dunelm
Dunelm has been boosted by locked-down customers redecorating their properties (Dunelm/PA)

Investors will be keen to hear how sales momentum has continued in the latest two months when the retailer reports its latest official trading figures on Wednesday October 8.

Sales in the fourth quarter to the end of June jumped by 102% as the firm was buoyed by the reopening of its physical stores.

Growth is expected to slow but shareholders will want to know the extent of this and whether profitability will be significantly impacted, alongside any cost rises.

Cost inflation for goods, as well as higher supply chain costs amid a nationwide shortage of HGV drivers, could impact on the firm’s profit progress for the new financial year.

The group is expected to report a pre-tax profit of around £158 million for the past year, while analysts have forecast this will move marginally higher to £164 million for the 2021-22 financial year, with a small decline in margins.

Dunelm has also previously highlighted that it will invest significantly to boost its logistics capacity, which could also impact the firm’s profit guidance.

Danni Hewson, AJ Bell financial analyst, said: “More strategically, watch out for any further comments on supply chain disruption, cost or price increases and plans for investment in both digital capability and warehousing space.

“Dunelm is breaking ground on new warehouses in Daventry and Stoke, sites expected to cost £12 million and add £8 million to operating costs in the year to June 2022.”

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