Value homewares retailer Dunelm has warned of toughening trading conditions, despite the likelihood that operating profits this year will be just ahead of expectations.
The retailer reported an 8% rise in like-for-like sales for the full year to July 3 when total sales were £492.8m.
But chief executive Will Adderley cautioned: “We do not anticipate it will be possible to maintain last year’s rate of like-for-like sales growth in the coming 12 months as consumer spending has to absorb tax increases, public sector cuts and potential interest rate rises.”
Gross margin for the year is expected to increase by 190 basis points, but Adderley warned that gains next year would be difficult because of uncertainty over sterling and increases in freight costs.
Dunelm said that like-for-like growth was “marginally negative” in the final 10 weeks of the period, “reflecting strong comparatives in the prior year”. The sales pattern was also affected by a shift in Dunelm’s accounting calendar.
UBS analyst Isabel Green increased her profit forecast by 3% to £76m after Dunelm’s “reassuringly solid” performance.