Dunelm’s fourth quarter performance has exceeded expectations as it benefitted from the wet weather, leading some anaylsts to increase full-year pre-tax profit forecast to £96m.

Dunelm has been successful at evolving its proposition, enhancing its ranges, particularly at the premium end, which has helped it to broaden its appeal even further. Looking ahead, there are competitive threats on the horizon, including the continued expansion of John Lewis’ ‘At Home’ format and improved soft furnishings offers from retailers such as Ikea. Moreover, the external environment will continue to exert downwards pressure on demand for homewares. Nonetheless, Dunelm’s proposition has proved immensely relevant during the past few years and the retailer continues to be ideally positioned to take advantage of consumer sentiment - Joseph Robinson, Conlumino

Dunelm has been one of the few retail beneficiaries, along with John Lewis department stores, of the recent spate of wet weather, which has driven consistently high levels of traffic into its stores. There is however, disappointingly, no news at this stage of a further capital repatriation, despite further strength in underlying cash generation. Dunelm clearly merits a premium rating, given its status as one of the few organic growth stories in the sector and its strong track record of cash generation – David Jeary, Investec

Dunelm has published an exceptionally strong fourth quarter imterim management statement today with like-for-like sales up 10.4% versus our forecast 2% increase, despite strong comparatives (up 1.9%). Added to this, the full year 2012 profit before tax guidance of £96m for the full year compares with our top-of-the-range estimate of £93.6m (up 12%) and consensus £92m. Part of the beat comes from a stronger than expected gross margin (up 20-30 bps versus up 20 bps previously guided) mainly due to lower levels of stock going into the summer sale, but wet weather conditions contributed £8m additional revenues in the quarter and around £2.5m additional profit before tax in the second half as a whole – Jean Roche, Panmure Gordon & Co

The store pipeline continues to build and we continue to see significant headroom for UK expansion going forward which is the key differentiator between Dunelm and many of its retail peers. With just 115 superstores and many areas of the UK not covered, Dunelm has significant headroom for UK expansion and management have stated that they believe there is scope to expand the chain to at least 200 superstores. This expansion potential is a key differentiator between Dunelm and many of its retail peers and is the core driver behind the investment case – Mark Photiades, Singer Capital Markets

The company has a clear niche in a category where competition is fragmented. It also has further opportunity to roll out new stores. It currently has 115 superstores with a development potential for 150-200 and can, we believe, further improve gross margins – Freddie George, Seymour Pierce

These healthy results show that Dunelm has been able to carve growth out of the homewares sector, one of the hardest hit during the downturn, and further growth looks promising for the retailer. It has 10 new stores in the pipeline, and further developments planned for its multi-channel offer. While it has set a high bar both for itself and its competitors, Dunelm has proven it has the ability to perform well in a homewares market which can be described as anaemic at best - Andrew Stevens, Verdict