Dunelm’s profits took a tumble in its first half, despite climbing like-for-like and online sales.
The home furnishings retailer reported an 8% drop in pre-tax profits before exceptional items to £60m, due to costs associated with its recent acquisition of Worldstores and lower margins.
After exceptional items, pre-tax profits inched up 0.7% to £56.3m in the 26 weeks to December 30.
Meanwhile, like-for-like sales jumped 6%, including store like-for-like growth of 3.5%. Total sales jumped 18.4% to £5445m.
The retailer, which named Nick Wilkinson as its new chief executive at the end of last year, added that online sales shot up 37%. Its ecommerce business now accounts for nearly a fifth of its total sales, up from around 12% last year.
However, chairman Andy Harrison said: “There is still more work to do to convert our good top-line growth into better bottom line profit growth.”
He explained that the firm’s gross margin “was lower”, due to “the mix effect of acquired Worldstores sales and a higher proportion of end-of-season and seasonal products”.
“We expect a more stable margin performance in the second half, which, together with reduced losses and increased integration benefits from the acquisition, should deliver good full-year profit growth,” he said.
Dunelm said it is making good progress on the integration of Worldstores.
However, earlier this month, it disposed of the Achica business – which came as part of the Worldstores Group – after deciding the brand “did not fit with the core Dunelm proposition”.
It sold the flashsale site to BrandAlley for £600k.
Last year, Dunelm unveiled plans to install Kiddicare concessions in up to 50 of its larger stores.
Finance chief to step down
Dunelm chief financial officer Keith Down has declared his intention to step down from the business in June for “personal reasons”.
The retailer, which operated 169 stores, has commenced the search for his replacement.
Harrison praised Down’s contribution to the business, and said: “We are working with Keith for a smooth transition to his successor, who will work alongside Nick Wilkinson to ensure we maintain our momentum.”