Dunelm full-year profits soar as wet weather lifts sales

Like-for-likes were up 3.1% while revenues increased 12.1% to £603.7m, including an estimated £8m benefit from the adverse weather conditions in the final quarter.

Gross margins were up 30 basis points to 48.3%.

Twelve net new superstores opened in the year, with a further three having opened since the year end, taking its store count to 118. The retailer is committed to opening a further eight stores at this stage, and is targeting 200 overall.

Dunelm invested in “major refits” across half the estate in the past three years.

The retailer enjoyed “strong growth” in multichannel, which now accounts for 2.5% of revenues across the year as it launched a Reserve and Collect service as well as a mobile site.

Dunelm chief executive Nick Wharton said more improvements across multichannel are in the pipeline, including offering an improved delivery proposition “to provide speed and choice in line with market norms”.

To achieve this, Dumelm will “require technical enhancements” to its site as well as the expansion of its logistics operations. “These significant developments are targeted during the current financial year,” said Wharton.

He added: “Dunelm has delivered robust trading results in a demanding retail environment, with our strong focus on retailing excellence leading to increased market share on a like-for-like basis.

We have also made good progress with our strategic development, scaling our business through new stores, multichannel, and strengthened infrastructure, while continuing to improve our specialist customer proposition. I would like to thank all my colleagues for their hard work and commitment in achieving this.

“Our financial position remains extremely strong which, together with the board’s confidence in Dunelm’s future growth prospects, enables us to propose an increase in the dividend ahead of earnings, together with a return of excess capital equal to 32.5p per share.

“Looking ahead, we remain cautious of the UK consumer environment and its impact on our trading in the near term. However, with a strong new store pipeline, good momentum in multichannel and a ‘Simply Value for Money’ proposition that continues to resonate with a wide range of customers, we remain confident in the future growth prospects for the business.”

Dunelm said its breadth of offer, from quality products down to entry-level items, have enabled it to attract new customers in the year.

The retailer “refreshed” its advertising during the year to provide a “clearer and more consistent image”. It moved away from local press and focused more on national.

It also upped its spend on digital marketing and social media activity,

Wharton said Dunelm benefitted from reassigning staff time in store “from non-customer facing tasks to providing customers with knowledgeable, friendly service”.

In the year Dunelm moved in to a new head office in Syston, Leicestershire.