Dunelm sees continued sales and profit growth despite ‘difficult’ trading environment
Homewares retailer Dunelm has said total sales rose 4.5 per cent in the first half of 2024 as it increased its market share in the furniture market.
Revenue hit £872.5m in the six months ended December, up from £835m in the first half of last year, the company said on Wednesday. Profit before tax jumped nearly five per cent to £123m in 2024.
Some 36 per cent of these sales were generated through digital channels, a slight increase from the previous year.
Chief executive Nick Wilkinson said: “This has been particularly important in a more difficult trading environment and has resulted in another strong sales performance combined with market share gains.”
Market share increased in both homewares and furniture markets, with a combined gain of 50bps, the value company said. Market share for the period January 2023 to December 2023 was 7.6 per cent, according to Globaldata UK.
“Despite ongoing pressures on consumers, we are encouraged by the wide variety of new customers shopping with Dunelm, and existing shoppers also coming back more frequently.
“Alongside the positive sales performance we have delivered a very strong gross margin, which is testament to our tight operational control and the inherent strength of our business model,” Wilkinson added.
Despite the economic crisis, Dunelm has seen a healthy appetite for its bedding, curtains and decor items, with four new stores opened over the first half of 2024.
Although Dunelm said its consumer outlook remains “uncertain” it has held its full-year guidance for profit before tax, which is in line with analyst consensus estimates at £199m to £207m.
Peel Hunt analysts have rated Dunelm a ‘buy’, saying that “continued market share gains and increasing levels of digitalisation give us confidence that forecast momentum will remain positive.”
Shareholders are set to receive a total of £103m in dividend payouts, both from the ordinary dividend of 16p per share, as well as a £71m special dividend of 35p per share announced on Wednesday.
“Dunelm’s move to increase the ordinary shareholder payout and pay a special dividend on top demonstrates its confidence in the outlook,” said AJ Bell investment director Russ Mould.
“It may help to reassure any investors concerned about the company’s reference to being impacted by the disruption to Red Sea shipping routes. Notably, workarounds to address this issue mean the improvement in margins seen in the first half is set to slow in the second half,” he added.