Dunelm’s value proposition drives growth

For the 26 weeks to January 2, sales were up 26% to £254.2m, pre-tax profit was up 69.3% to £46.2m, and its gross margin is up 200 basis points to 48%.

Dunelm chief executive Will Adderley said: “I am delighted with the results we have produced for the first half of our financial year. I believe they reflect the strength of our ‘Simply value for money’ proposition, with our industry-leading depth of choice supported by highly competitive prices.

This year’s figures benefitted from the timing of the period end, which included eight days trading from the winter Sale, compared with only two last year. It estimates this benefit contributed approximately 2 percentage points to its like-for-like growth.

“On top of the excellent trading results, our financial strength and the cash generative nature of our business allow us to return some £43 million to shareholders without restricting our future expansion plans.”

During the period, Dunelm opened six shops, and will open another five in its current financial year. It is pushing its online operation, Dunelm Direct, which now stocks 12,000 products.

For the seven weeks to February 20, like-for-like sales fell 0.2% and total sales were up 9.1%. Adjusting for the reversal of the calendar effect relating to the winter Sale timing, underlying like-for-like growth was over 6%.

Adderley said: “We expect consumer spending to weaken in 2010 compared with 2009 as a result of broader economic and political factors. However, our business is in excellent shape and our customer proposition remains compelling. I am confident that even if LFL growth does prove challenging, overall Dunelm will continue to grow and to become an even stronger business.”