New stores help Dunelm to small first-half profit rise

LONDON, Jan 7 (Reuters) - Homewares retailer Dunelm Group (LSE: DNLM.L - news) said it expected to post a small rise in first-half profit after its store expansion push helped boost sales.

The 140-store group, which sells bedding, curtains, furniture and home utility items, said six new stores opened in the 26 weeks to Dec. 28, together with a 100 basis point improvement in its gross margin, meant it expected to post a pretax profit of 61.5 million pounds in the first half.

That would represent a 2.8 percent rise on the 59.8 million pounds ($98 million) posted for the year before.

Dunelm said sales at stores open over a year grew by 2.9 percent in its second quarter, broadly in line with analyst forecasts, helped by a new autumn catalogue and its first TV advertising campaign. Total (NYSE: TOT - news) sales rose 7.3 percent.

The underlying sales rise comes after a tough start to the year for Dunelm when a hot British summer kept customers away from its out-of-town stores and saw like-for-like sales decline 5.3 percent in its first quarter.

Total sales for the six months rose 4.8 percent to 356.3 million pounds, with sales at stores open over a year down 0.9 percent, the firm said.

Dunelm said it expected to open 10 stores in the financial year, including three relocations, moving it closer to its medium-term target of 200 superstores across the UK.

Shares in Dunelm closed at 979 pence on Monday, up by almost half on a year ago, valuing the firm at almost 2 billion pounds.