Dunelm profits and sales slide despite homewares boom

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Dunelm has posted a fall in full-year profits as store closures during the coronavirus crisis dented its sales.

The homewares specialist suffered a 13.3% drop in pre-tax profit to £109m in the 52 weeks to June 27, as the retailer grappled with the impacts of the pandemic.

Sales fell 3.9% year on year to £1bn, despite a 6.8% rise in sales in the eight months to February – the period before the pandemic struck.

Dunelm recorded a spike in online sales, which more than doubled year on year after its stores were forced to close during the fourth quarter.

The business hailed “strong trading” in the first two months of its new financial year, with sales jumping 59% in July and 24% in August, buoyed by a combination of pent-up customer demand and the retailer’s summer Sale.

Digital sales accounted for 31% of Dunelm’s total sales during that two-month period and were up 130% compared with the same period a year ago.

The retailer said it has not made any claims through the government’s job retention scheme since its stores reopened, and does not plan to claim the government’s job retention bonus, which offers businesses £1,000 for every employee brought back from furlough leave until the end of January.

Dunelm chief executive Nick Wilkinson said: “We made good progress before the onset of Covid-19, building our digital capabilities, extending our product choice and value, and broadening and deepening our customer base.

“These recent months have taught us about our ability to innovate at pace and we are emerging stronger as a result, giving us the confidence to accelerate our strategic priorities, all of which focus on being customer first.”

Wilkinson said sales in July and August had been “significantly ahead of our expectations”, driven by “strong growth” in its home delivery proposition.

But he cautioned: “Whilst the year-to-date performance has been materially ahead of our initial expectations, it is very difficult to provide any meaningful guidance on the future outlook given the uncertainty in the wider economy and the potential impact of further regional or national lockdowns.”