In a trading update issued on Tuesday (July 8), homeware chain Dunelm predicted a 7.4% rise in pre-tax profits for the year to June 28.
The specialist retailer said that taking into account its solid trading performance in the final quarter and planned increase in the rate of revenue investment during the year, it anticipates a pre-tax profit for the year of £116m.
Over the full financial year, total sales grew by 7.8% to £730.2m and like-for- like sales by 2.1%. The final quarter like-for-like sales growth of 5.5% continued the improving trend of previous quarters.
Dunelm attributed this in part to the impact of the summer 2013 heatwave ‘which held back performance in the early part of this financial year, but also the positive impact on sales from our investment in key growth initiatives’.
These include a multi-channel fulfilment operation introduced in October, a £3m national TV advertising campaign and the roll-out of the ‘Dunelm At Home’ home design service.
The company noted that its online business ‘continues to be an important driver of revenue growth, albeit currently operating at a lower level of profitability than our traditional store channel’. Over the financial year as a whole, multi-channel revenues represented 6% of total sales, increasing to 7% in the final quarter. This summer it will complete an upgrade of the site to improve customer experience.
Dunelm, which describes itself as the UK’s largest homeware retailer, operates 143 stores. Of these, 136 are out-of-town and seven are located on high streets. There is also an online store at www.dunelm.com featuring 18,000 products. Latest store openings include Ashford, Keighley, Rustington and Chester.
Commenting on Dunelm’s performance, chief executive Nick Wharton said: “We have continued our strategy of increasing scale through new store openings and multi-channel growth, whilst investing in our customer proposition for the future. During the period we have increased the rate of that investment, ensuring we continue to provide our customers with market-leading choice and expertise, helping us to maintain our differentiation from competitors over the long term. With a strong pipeline of new stores, further enhancements to our multi-channel capability, and a positive response to the continuing development of our customer proposition, the board remains confident in the group’s long-term growth prospects.”
Dunelm was founded in 1979 as a market stall business, selling ready-made curtains. The first shop opened in Leicester in 1984 and over the following years the business developed into a chain of high street shops before expanding into broader homeware categories following the opening of the first Dunelm superstore in 1991. The superstore format provides an average of 30,000sq ft of selling space for more than 20,000 products, from textiles (bedding, curtains, cushions, quilts and pillows) to kitchenware and dining, lighting, wall art, furniture and rugs.