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Retail Viewpoint – Dunelm

New chapter for homewares market leader

Ex CEO John Browett’s shortcomings stretched beyond being the wrong ‘fit’ with homewares retailer Dunelm; during his two-year tenure, the retailer suffered poor l-f-l growth and Dunelm’s share price fell nearly a third over the course of the year to date – more than any other significant home retailer.

However, Browett did have some successes; the FTSE 250 company acquired Worldstores – which led to online share growing to 20% versus 7% the year before – and increased its store estate.

The start of this financial year has, so far, been positive for Dunelm. But Browett’s departure could spike a period of volatility for the homewares market leader while the leadership gap is filled internally. This is dangerous ground, not only because market conditions are particularly tough, but also because discounters and fashion players are honing in, and will strike while the iron is hot.

The future strategy of Dunelm will now be up to Browett’s successor – will Dunelm continue to pursue young families through 50 trial Kiddicare shop-in-shops? This doesn’t seem an obvious fit for Dunelm, given the retailer has an older customer demographic and has, historically, concentrated on its breadth of ranges. What is certain is that, with the acquisition of Worldstores, online is still likely to be a key focus. We remain positive on the retailer’s outlook and forecast a 0.1% market share increase in 2017.

Source: GlobalData, 13th September 2017

Sept 2017

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