- Sales rise on volume growth
- Earnings to top estimates
- CEO optimistic for coming year
Homewares retailer Dunelm (DNLM) demonstrated once again how resilient its business is against a challenging consumer backdrop by posting an increase in sales and earnings slightly above expectations for the year to the end of June.
The shares, which had been trading down on the year, added 75p or 7% to £11.80 taking them into positive territory by a small margin.
PROFIT TO TOP FORECASTS
For the fourth quarter from April to June the company posted a 5% increase in revenue to £399 million, taking the full-year figure to £1.7 billion, an increase of 4% on the previous year.
Higher volumes were the key driver of sales, both in-store and online, and the firm believes it is gaining market share on its rivals as customers respond to its new products.
Volume growth was consistent across most categories bar outdoor furniture, which was impacted by the poor weather in April and May, suggesting Dunelm is seen as selling ‘essentials’ rather than ‘nice-to-haves’ as far as consumers are concerned.
‘We delivered another strong performance in Q4, with continued volume-driven sales growth across both store and digital channels,’ said chief executive Nick Wilkinson.
‘Amidst ongoing consumer caution, our unrelenting focus on value and choice means the Dunelm proposition has continued to resonate with customers, and we saw both full-priced and discounted lines trade well during our summer sale period.’
Wilkinson also revealed full-year pre-tax profit would be slightly ahead of market expectations thanks to the firm’s strong gross margin performance.
‘Going into FY25, we have a significant opportunity ahead of us. We are finding quality sites for new stores and are increasingly confident in our smaller format stores,’ added the chief executive.
EXPERT VIEWS
Analyst Andrew Wade at Jefferies described the results as ‘robust’ and the business as ‘a high-quality operation’, although he flagged the upgrade to earnings just reversed the small downgrade guided by the company at the third-quarter stage so there were unlikely to be any changes to his FY25 forecasts.
Anubhav Malhotra and Wayne Brown at Panmure Liberum were more generous, calling the results ‘a very commendable performance as the group continues to take share in a tough end-consumer market’.
‘We believe Dunelm is a clear winner of the turmoil in UK retail over the last five years and remains geared into any consumer recovery,’ added the analysts, albeit the timing of that recovery remains uncertain.
