Dunelm interim profits rise, FY profit to beat expectations
Homeware retailer Dunelm reported a rise in interim profit on Wednesday and said full-year pre-tax profit will be "slightly ahead" of analyst expectations.
In the 26 weeks to 28 December, pre-tax profit increased 19.4% to £83.6m with revenue 6% higher at £585m, reflecting the benefit of new stores in the current year and the closure of the Worldstore businesses in FY19. Dunelm said growth was seen across most product categories, including furniture sales, which rose 42% during the half.
Like-for-like sales were up 5.6% and the interim dividend was lifted 6.7% to 8p a share.
The company said it had grown market share in a "soft" homewares market, dented by political and economic uncertainty.
Chief executive officer Nick Wilkinson said: "We have made good progress over the first half, following a strong performance last year, which is reflected in the significant growth delivered in both sales and profits.
"We continue to build strong foundations for future growth. The successful launch of our digital platform accelerates our ability to innovate our customer proposition and we remain focused on operational improvements across all areas of the business."
Wilkinson said the third quarter had started "well", with a successful winter sale across the total retail system. As a result, the group now expects FY20 pre-tax profit to be "slightly ahead" of the top of the latest range of analyst expectations of between £135m and £137.3m.
Dunelm said it was monitoring the coronavirus outbreak carefully. "To date we have not assumed any material disruption to our supply chain or any financial impact in the year," Wilkinson said.
At 0900 GMT, the shares were up 5.5% at 1,267.00p.
Russ Mould, investment director at AJ Bell, said: "The business is clearly on a roll yet it must be noted that Dunelm’s products aren’t everyday essentials that need regular replacement. Consumers experiencing more difficult economic conditions could easily get by without having to buy a new quilt or a new set of saucepans. Therefore deterioration in economic conditions could easily cause a nasty blow to the company.
"Its share price has more than doubled since the start of 2019 as new energy is breathed into the business. The stock has today hit a new record high following the half year results. It definitely deserves a pat on the back, yet expectations are now so high that Dunelm can’t afford to make any mistakes.”