Homewares retailer Dunelm to drive online offer as first half profit jumps

Dunelm will open a dedicated fulfillment centre for its online orders in the summer, covering 30-40,000 sq ft. The retailer will also improve its delivery options to include next day as well as AM and PM time slots. Customers have to wait between 5 to 7 days for their online orders currently.

“As a market leader we need to provide the convenience that our customers want,” Dunelm chief executive Nick Wharton told Retail Week.

The retailer has also launched online-only ranges, particularly in furniture.

Bolstering its multichannel offer, Dunelm launched its first catalogue in the period, and plans to issue two a year. Multichannel sales now represent 4% of the business, and grew by between 60-70% in the period.

Pretax profit surged 14.6% to £59.8m in the 26 weeks to December 29. Like-for-like sales jumped 2.2% and revenue was up 13.4% to £340.1m.

Gross margins jumped 30 basis points to 49.5% as Dunelm benefitted from an increase in direct sourcing, growing economies of scale, and lower commodity costs.

The retailer grew share in the period, aided by a price drop in September, when Dunelm permanently slashed prices by 10% across 700 products as part of its ‘New Lower Prices’ initiative. “It reinforces our value credentials,” said Wharton. “More people are buying into strength of proposition.”

He added that Dunelm had also benefited from its diverse shopper base. “Our key advantage is the breadth of customer base,” said Wharton. “We sell bath towels from £5 to £30.”

Dunelm opened 10 superstores in the first half, taking the store count to 123.

Wharton added remained cautious on the outlook. “2013 will be like 2012,” he said. “Customers will be very cautious and increasingly looking for value.”