Robust reopening for Dunelm as firm plans investment

Homewares retailer Dunelm today reported strong growth as it bounced back from coronavirus retail restrictions, with profits slightly ahead of forecasts.

Despite this outlook, shares in the Leicester-based company fell around 3 per cent this morning.

Sales more than doubled in the fourth quarter compared with the same period in 2020, when the UK was in national lockdown. Compared with pre-pandemic performance in Q4 2019, this was an increase of 43.9 per cent.

Yearly sales in 2021 to date also saw an overall 26.3 per cent increase on the previous year.

The firm noted sales were especially strong following the lockdown measures lifting and stores reopening on 12 April this year. It said this was partly due to “pent up demand” but sales remained strong throughout the quarter.

The company’s click and collect service was particularly popular with customers, representing a quarter of digital sales.

Dunelm’s gross margin also improved in Q4 and for the full year. The Q4 increase was spurred on by the company delaying its summer sale, which is usually over by this time.

The company said it will increase investment levels in the next fiscal year, focusing on digital and data capabilities, store experience and commercial capabilities. It will also create two new distribution facilities to build capacity for future growth.

Dunelm told investors it would provide a detailed investment plan in its full year results this September.

Nick Wilkinson, Dunelm chief executive officer, said: “In what has been a challenging year for Dunelm, I would like to personally thank my colleagues for their extraordinary efforts and adaptability.  

“Although our stores were closed for more than a third of the year, our strategy of investing in our digital capabilities allowed us to adapt to the changing environment and deliver strong growth.

“From what we have learned during the pandemic about our customers, colleagues, suppliers and our other stakeholders, we are more confident than ever about the opportunity to increase our market leadership and we will invest further in our proposition to support our growth ambitions.

“With many exciting developments in the pipeline to make us the first choice for home, and grow our customer base and frequency, there is a lot to look forward to.”