Homeware chain Dunelm is a High Street star as it posts jump in profits, gears up for more store openings and seals deal with Channel 4’s ‘First Dates’ show
- Dunelm to trial a new small ‘low cost’ 5,000 square foot High Street store
- Homeware group’s profit jumped 19.4 per cent year-on-year to £83.6million
- Shares in Dunelm are up 10 per cent to 1,324 following the news
Homeware retailer Dunelm has significantly upped its annual profits after enjoying higher sales in the last six months.
Boss Nick Wilkinson said Dunelm plans to open two or three new superstores this year, including one in Durham, and will shortly trial a small ‘low cost’ 5,000 square foot site on a high street.
Bucking the trend for retailer doom and gloom, Dunelm’s share price jumped over 10 per cent to 1,324p this morning, and investors have seen their interim dividend rise 6.7 per cent to 8p a share.
The retailer has also signed a deal to feature its products on Channel 4’s First Dates programme, starting later this week.
New stores: Dunelm plans to open two or three new superstores this year and trial a small high-street outlet
The group’s pre-tax profit jumped 19.4 per cent year-on-year to £83.6million, as revenue rose six per cent to £585million. Like-for-like sales climbed 5.6 per cent.
Free cash flow dropped 29.4 per cent from the same period a year ago to £91.2million, but the group trimmed its net debt by seven per cent to £67.7million.
Dunelm also said it has seen ‘no material hit’ from coronavirus to its supply chain. Wilkinson said the group was ‘monitoring the coronavirus outbreak carefully.’
The group said its sales and profits were bolstered after it reduced the number of promotions on offer for shoppers and not taking part in any Black Friday events.
A new website rolled out in October also helped and tablets in stores eased the ordering process for shoppers, the group said.
Wilkinson said: ‘The third quarter has started well, with a successful Winter Sale across the total retail system.
‘As a result, we expect full year FY20 profit before tax to be slightly ahead of the top of the latest range of analyst expectations.’
Full price: The group said its sales and profits were bolstered after it reduced the number of promotions on offer for shoppers
Dates deal: Dunelm has signed a deal to feature its products on Channel 4’s First Dates programme, starting later this week
The group did not reveal where its first smaller high-street test shop would be located, but said it aimed to ‘understand how our customers react to a smaller, edited range in a location chosen to increase our reach.’
Dunelm has invested heavily in its website over the last few years and says 6,000 online-only products will be added to the site this year.
Following 18 months of growth, the homewares market shrunk by 1.4 per cent in the first half of the year. According to Dunelm, it grew by 2.3 per cent over the period, ‘suggesting an outperformance of the market by around 3.7 per cent points.’
Russ Mould, investment director at AJ Bell, said: ‘It has been something of a golden period for Dunelm. Not only did it rise above the retail blues last year with impressive trading but more recently it has managed to roll out a new technology-based project without messing it up.
‘Half year results illustrate just how successful the company has been. It is generating more sales and profits and paying shareholders higher dividends. In a sign of retail power, it is managing to get customers to buy lots of stuff without having to resort to heavy discounting.
‘And for all the chatter about people no longer going to the shops, it reports ‘positive footfall’ which suggests its stores still offer enough appeal to drag people out of bed to see the products in person.’
Mould thinks the upturn in the housing market will help Dunelm. He said: ‘A pick up in house prices in January should benefit Dunelm as it suggests stronger activity in the property market. Moving house is a good excuse to buy new bedding, curtains and furniture, all of which is the domain of Dunelm.’