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Dunelm keeps delivering as sales leap in first half

Dunelm Lowestoft

Dunelm, the Leicester based homewares company saw sales increase 13.6% to just under £300m in the 13 weeks to 30 December 2017. This increase brings half-year revenue to £545.4m, an overall increase of 18.4% compared to the same year.

Chairman Andy Harrison commented: "After a good first quarter, it is pleasing to see our sales momentum maintained with total sales growth, and like-for-like sales growth, of 13.6% and 3.4% respectively in the second quarter. This performance is driving our continued market share gains. We are now up to 169 superstores having successfully opened five in the quarter.

"Continuing rapid like-for-like online growth, of 36.8% in the first half, coupled with passing the first anniversary of the Worldstores acquisition, has helped our online sales grow to 16% of total sales in the first half (18.5% including Reserve and Collect). We are well on the way to becoming a genuine multi-channel retailer".

"Margins in our core Dunelm business have been maintained in the first half, although there has been a sales mix impact on margins from the Worldstores acquisition and the higher participation of seasonal and end of season products. Overall, we remain on track, with good sales growth and market share gains, offset by margin mix.

"We are well positioned to deliver good full-year profit growth, after a small reduction in the first half, largely due to the consolidation of Worldstores losses."

However, gross margins, due to increased promotional activity and a quicker turnaround of product lines, have dropped 1.8%.

During their Q2, the company opened five new stores, bringing its total to 169.

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George Salmon, Equity Analyst at Hargreaves Lansdown: “Dunelm’s top-line growth of 18% is eye-catching. However, this has been boosted by the continued roll-out of new stores and extra discounting. Having more items on sale has got the punters flocking in, but it shouldn’t be forgotten that by dropping prices the group is taking a hit on profit margins.”

“While we’ll be keeping an eye on margins from here on, it’s hard not to be impressed by the progress made in the last six months or so. The acquisition of Worldstores gives the group greater online exposure, an area it’s clearly looking to leverage.

Source: Insight DIY Team & Dunelm press release.

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16 January 2018

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