Dunelm second-quarter sales boosted by TV campaign and catalogue

The jump in sales at the value homewares retailer followed a 5.3% drop in first-quarter like-for-likes after warm weather hit footfall. Like-for-likes edged down 0.9% in the first half to December 28.

Total sales increased 4.8% to £356.3m in the 26-week first half as Dunelm opened five net new stores in the period.

Gross margin is estimated to have improved by 100 basis points in the 26-week period after the retailer’s direct sourcing programme “continued to bring benefits and as we annualised the impact of clearing slow-moving promotional lines”, Dunelm said.

Dunelm said there has been “continued progress” in its multichannel business following the transition to a new fulfilment centre in October.  Multichannel sales now represent 6% of total revenues.

The 131-store retailer intends to open a total of seven net new shops by the end of the year, and is targeting 200 in the long term.

A first-half pre-tax profit of £61.5m is expected.

Dunelm chief executive Nick Wharton said: “Dunelm traded robustly during this key period with our trusted every day low price positioning retaining a strong appeal for customers.

“Our home delivery proposition has become much stronger as a result of our new fulfilment centre, and we are beginning to see the benefits from our increased advertising investment to drive brand awareness.

“These investments have been funded through continued gross margin expansion and with continuing profitable growth from new stores, the board anticipates that profit before tax for the first half of the year will be approximately £61.5m.

“With a strengthening customer proposition, increasing brand awareness, a significant new store growth opportunity and an exciting multichannel agenda in place, the board remains confident in the long term growth prospects for the business.”