Weather shines on Dunelm as sales jump nearly 25%
Dunelm shares rose in the wake of first-quarter results.
Homewares retailer Dunelm has thanked favourable weather for helping drive more customers into its stores and contributing to a near 25% jump in revenue in the first quarter.
The company’s results showed that like-for-like sales grew 9.3% to £214.3 million in the 13 weeks to September 30, contributing to a 24.8% rise in total group revenue to £247.9 million.
Like-for-like store revenues, which accounted for the bulk of the group’s sales, rose 6.5% to £194.4 million.
Chairman Andy Harrison said: “We have maintained the good momentum from the final quarter of the last financial year.
“Our like-for-like sales were boosted by favourable weather comparatives and, pleasingly, we continue to outperform the homewares market, with strong growth across the business, especially online.”
Dunelm.com saw a 46.2% rise in online sales to £19.9 million, while revenue from the sites of recently acquired Kiddicare.com, Achica.com and Worldstores.co.uk brought in a further £20.7 million.
“The integration of the Worldstores business continues on plan, with good progress in the quarter. We are well on the way to becoming a genuine multi-channel retailer,” Mr Harrison added.
Shares were up around 4% or 27.5p at 728.5p in morning trading.
The chairman said: “We head into the second quarter having opened a number of new stores and with an improved seasonal offer for the Christmas period, which we’re sure will resonate well with customers.”
Dunelm opened five new stores during the first quarter, bringing its portfolio total to 165 sites, with plans to open five more locations by the end of 2017, one of which will be a relocation.
The company said it is expanding its footprint in the South East and London, where it now has 11 stores within the M25.
In less upbeat news, Dunelm noted a narrowing of gross margins, which were 220 basis points lower compared with last year.
It blamed the drop on the incorporation of lower margin Worldstore sales, as well as its “focus on newness” in its latest homeware ranges and the planned “higher seasonal sales mix”.
Dunelm is still operating without a chief executive nearly six weeks after John Browett stepped down at the end of August for “personal reasons”.
The company said that Mr Browett, who was appointed as boss in 2015, had made “good progress over the last two years”, but that the next “phase of growth requires different leadership”.
Mr Harrison has taken on the role on an interim basis, but the company has yet to announce a replacement.
Peel Hunt analyst John Stevenson said: “Despite the lack of CEO, we can see investors gaining further confidence in Dunelm’s recovery potential.
“Weak comps and weather might not be the strongest catalysts, but positive numbers will certainly go some way to lifting the shares.”