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Dunelm warns of challenging market as profits slip

Dunelm Lowestoft

Dunelm has warned of a challenging UK consumer market as it reported a 28% decline in full year profits to £92.4 million. Profitability had been hit as a result of one off costs relating to the acquisition of Worldstores in November 2016.

Read - Dunelm to acquire Worldstores

On a positive note, group sales for the year to July 2017 increased 8.5% to £955.6 million, although like-for-like sales declined 2.4% and the group warned that the current outlook face cause for concern. Whilst on-line sales increased 23.5%, the retailer blamed "unusually warm weather" (Insight DIY comment - when was that, I think we must have missed it!) for the drop in store footfall.

Commenting on the first two months of the new financial year, a spokesperson said the year had started “positively” and it expects to open eight new stores in the first half, four of which are already trading.

Andy Harrison Chairman said: “Dunelm has made good strategic progress over the year, most notably with the acquisition of Worldstores, which moves us closer to our goal of being the biggest and best multichannel homewares retailer in the UK. We expect the trading climate to remain challenging with the disposable income of UK consumers under pressure.” Looking ahead, Harrison said the group is still aiming to double sales to £2 billion, driven by its online offering.

Two weeks ago Dunelm chief executive John Browett announced he was stepping down with immediate effect for “personal reasons”.

Read - Dunelm CEO steps down in shock exit

Fiona Cincotta, a senior market analyst at www.cityindex.co.uk commented "Despite recent management upheaval, Dunelm still appears to be coping with the subdued retail environment reasonably well.  Encouragingly, the sales momentum it enjoyed in its fiscal fourth quarter has continued into August and September and new store openings are on track".

"The final dividend has been nudged up by a cautious 2.1%, perhaps portending to the challenging market outlook.  The ability to executive on strategy is becoming more important as the market stutters, so the sooner the company can find a replacement CEO the better".

Source: Insight DIY Team & Cityindex.co.uk

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13 September 2017

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