Dunelm shares drop despite reporting revenue increase – as store sales hit by supply chain woes
Dunelm investors seemed unimpressed with this morning's report on trading in the 13 weeks to 31 December, despite group sales increasing.
The figures
Sales were up by 6.6 per cent year-on-year.
Like-for-like sales from stores declined, by 1.4 per cent, to £215.6m.
Dunelm's home delivery division saw a massive sales increase over the Christmas period, rising 21.7 per cent to hit £20.1m. This resulted in a total like-for-like sales increase of 0.2 per cent.
Shares in the company were down 1.56 per cent this morning.
Why it's interesting
The company blamed supply chain issues for the reduction in its sales from stores but said it had been making improvements by opening a new warehouse and consolidating suppliers.
The group said these initiatives had caused "some disruption to in-store availability during the quarter" – Dunelm incurred £3m of additional transitional costs as part of that process.
However, the company said today that availability has "already improved to near normal levels and we should see significantly less transitional costs in the second half of the year". And the performance in the last quarter was an improvement on the same period of last year, when the homeware chain blamed warm weather for a disappointing 0.8 per cent slide in sales.
The group said it opened five new stores in the 13 week period, and is "legally committed to a further seven new stores of which five are due to open in the current financial year".
What Dunelm said
“Following a difficult first quarter we have seen an improvement in performance both in our stores and online," said Dunelm chief executive John Browett.
"It was encouraging to see customers respond well to our seasonal product lines, especially our new Christmas offer. We have continued to outperform the homewares market in what is a challenging and volatile retail environment.
"We continue to focus on and invest in our key strategic initiatives, which will improve the business over the medium term, whilst ensuring we maintain our unique offer of tremendous value for money, combined with an unrivalled range and great service."