Dunelm Shares Jump After Late Sales Recovery, Profit Outlook Unchanged

Dunelm Group (LON: DNLM), the UK homewares retailer, saw its shares jump today after reporting first-quarter sales growth of 1.1% and keeping full-year profit expectations unchanged. The trading statement landed before the market opened.

The shares stood at 851.5p at 07:25, up 6.3% on yesterday’s close of 801p. They opened at 818p and reached a high of 854p, against a low of 817.5p.

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Total sales for the 13 weeks to the 26th of September were £432.7m, up from £428.1m a year earlier. Store-enabled like-for-like sales fell 0.8%, and digital accounted for 41% of sales, a point higher than before.

The quarter had two distinct halves. Sales fell about 3% in the first six weeks, which Dunelm blamed on exceptionally warm weather, then rose about 4% over the final seven. The company believes it outperformed a soft market.

The comparison was demanding. Total sales growth in the same quarter last year was 6.2%, with like-for-like sales up 2.2%, so 1.1% is a marked slowdown. Growth ran at 1.6%, 2.1% and 2.9% in the next three quarters. Gross margin edged up 10 basis points, or 0.1 percentage points, helped by a currency tailwind.

Made to Measure grew by double digits, and the Cook and Dine range did well, particularly in the second half of the quarter. Five store renewals are complete, and two openings are expected in the first half.

Chief Executive Officer Clo Moriarty pointed to the improvement through the period.

I’m encouraged by the momentum we built as the quarter progressed, following the impact of the exceptionally warm weather.

Clo Moriarty, Chief Executive Officer

Dunelm expects full-year adjusted profit before tax to be broadly in line with last year, but first-half profit to be lower, with the benefits weighted to the second half. The next update, covering the second quarter, is due on the 14th of January.