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Dunelm ends financial year on a high

Dunelm has turned the tables in Q4, reporting positive like-for-like sales for the first time this financial year – and its share price has soared this morning. This will come as a relief to CEO John Browett after he has repeatedly maintained that Dunelm can outperform the overall homewares market. Dunelm’s uplifting Q4 performance is a positive sign for homewares in what is a challenging retail environment.

Though Dunelm’s results are clearly bolstered by its recent acquisition – including the launch of Worldstores products on Dunelm’s website – the retailer had stellar growth of 70% in its seasonal products. The hottest June for 40 years will have spiked sales in summer bedding, outdoor eating, and garden furniture to name but a few.

However, there are a few alarm bells amid Dunelm’s pleasing results. The retailer anticipated that 1.5% of l-f-l sales would move from Q3 to Q4 as Easter fell later in the year. But Easter sales were down 7.0%, which negatively impacted Q4 l-f-l growth by 1.7%. The retailer also reported that gross margin was down as Dunelm introduced new ranges and marked down end of season stock.

Online will continue to be a key strategic focus for Dunelm and area of growth – newly acquired Worldstores will allow Dunelm to transition more effectively into being the multichannel retailer it desires to be. New store openings are planned for the next financial year as well as ongoing store refits, which should support l-f-l store sales growth (where Dunelm has struggled). This, in conjunction with a more developed online offer, sets the foundation for a strong 2018 for Dunelm.

Source: GlobalData, 10th July 2017

July 2017

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