Dunelm Group expects to end the year “modestly ahead” of market forecasts as it gears up for reopening.
The homeware retailer opened its 13 Scottish shops on Easter Monday and is preparing to welcome back customers to its 156 shops in England and Wales on Monday, although it is unclear when it will be able to restart its five outlets in Northern Ireland.
“We are anticipating a strong consumer response to the lifting of the restrictions, our stores are well stocked and ready for reopening and our colleagues are excited to welcome customers back,” it said.
The company was seeing “some minor disruption” within its global supply chain, but Nick Wilkinson, 54, chief executive, said: “We have worked hard to rebuild inventory levels and our stores are well stocked.”
Dunelm, which sells homeware items from kettles to blinds, was founded in 1979 by Bill and Jean Adderley, who sold curtains from a market stall in Leicester. It now has 174 shops and after a 75 per cent jump in its shares over the past 12 months is valued at almost £2.8 billion.
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In a trading update for the three months to March 27, its third quarter, Dunelm reported a better-than-expected 16.8 per cent fall in year-on-year sales to £236.6 million, helped by a surge in digital sales.
It said the level of sales “demonstrated the resilience of the Dunelm model during a period when the majority of our store estate was closed to customers”. Digital sales more than trebled since the same period last year, accounting for 92.4 per cent of total group sales compared with 22.5 per cent in the third quarter of last year. “The strength of our digital proposition, operating through home delivery and click and collect services, allowed us to cover over 83 per cent of prior-year sales.”
Despite its resilient performance under restricted trading conditions, it said it underperformed in a strong homewares market as a result of its retail estate being closed. This had put it at a disadvantage to other retailers selling homewares that were classified as essential and stayed open.
It expects to end the year just ahead of analysts’ expectations for pre-tax profit of between £120 million and £125 million.
Next week it will open a new shop, in Newcastle-under-Lyme, Staffordshire, that will have a “make & mend” department to encourage product repair and reuse, and an extended decorating offer.
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John Stevenson, an analyst at Peel Hunt, said: “Digital improvements, range development and customer recruitment all point to a market-beating performance, with net cash on the balance sheet a precursor to a potential autumn special dividend.”
Dunelm, which has a track record of paying special dividends, has net cash on its balance sheet of £40.2 million and access to £175 million of unutilised banking facilities. Last year it repaid £14.5 million of furlough money to the government and kept on its 10,000 employees with an internal furlough-type scheme.
The shares closed up 2.5 per cent or 33p yesterday at £13.81.
