Dunelm profits dip despite year of record sales

In its preliminary results for the 52 weeks to July 1, 2023, the retailer reported a 7.8% drop in profit before tax to £192.7m, despite a 5.5% jump in total sales to £1.63bn.

Dunelm said the fall in profits reflected “tight control of margin amidst inflation in our operating costs and our ongoing commitment to investment for the future” – such as digitising its end-to-end operations.

Gross margin in the period hit 50.1% and the business generated £160m of free cash flow.

In terms of current trading, the retailer said “consumer behaviour remains unpredictable” but insisted that its “value proposition [is] resonating well and [we] expect to see FY24 sales and profit before tax growth, driven by volume”.

Dunelm also noted that easing freight costs was supporting its margin, while its tight “operational grip” had helped mitigate ongoing inflation in operating costs.

The retailer said it would continue to invest in its customer offer, total retail system and marketing to support sustainable growth. It said it had “never been more confident in our plans to seize opportunities in the short, medium and long term”.

Chief executive Nick Wilkinson said: “In a period of extensive economic uncertainty, we have maintained our focus on enhancing our customer proposition, expanding our offer whilst staying fully committed to value and making every pound count. This has clearly resonated well with our customers, enabling us to continue growing both sales and market share. As ever, our amazing colleagues have been at the heart of this performance and I thank them all for their knowledge, personality, commitment and enthusiasm.

“As we manage the ongoing challenges, it is crucial that we do not lose sight of our longer-term ambitions. We are committed to raising the bar on value and joy for our customers and continuing to invest where we see good returns so that we can seize the various opportunities ahead.

“We are excited about our future growth opportunity and more confident than ever that our commitment to value and tireless focus on improving the experience for our home-loving customers will leave us well-placed to deliver sustainable growth in the future.”