Dunelm said like-for-like sales increased 5% in its third quarter. Retail Week rounds-up what the analysts said about today’s update.


“Dunelm remains an extremely well managed business with significant headroom for expansion and online development. Strong cash generation also suggests scope for further capital returns. The store pipeline progression needs to be monitored closely, albeit there are a number of other growth levers at management’s disposal.” Mark Photiades, N+1 Singer

“The company, in our view, has a great opportunity to improve gross margins, which were 48.7% in FY13, by growing own label and the amount of directly sourced product. It is also in the early stages of developing a multi-channel platform, with current focus on delivery speeds to consumers and infrastructure. Internet accounted for only 6% of sales in H2 FY14. Finally, it has further opportunity to roll out new stores and currently has 136 ‘out of town’ stores with a development potential in the view of management of up to 200 units.” – Freddie George, Cantor Fitzgerald

“Trading benefited from the lack of snow disruption, with a particularly strong January, while sales over March slowing with the warmer weather, making it difficult to discern the underlying run rate. Top-line growth has also benefited from the rollout of Dunelm at Home and the second-phase TV advertising campaign, which has now become national. Overall, this is a relatively strong performance, which leaves consensus profit expectations looking light.” – John Stevenson, Peel Hunt

“Today’s trading update from Dunelm looks pleasing, given a tough comp (+5.2% LFL sales in the quarter a year ago) and a late Easter, with LFL sales up by 5% and gross margins 100bps up. Dunelm prefer to focus on their investment in the business rather than any help from the housing market recovery, but no doubt both factors are helping to push the group forward.” – Nick Bubb, independent analyst

“The retailer will be pleased with this set of results for two reasons; firstly, its LFLs have recovered from the slight dip experienced in its first half, caused by long spell of warm weather in Q1. Secondly, and more importantly, it indicates that its long-term growth plan is on target. Dunelm’s growth strategy is consistent and coherent; combining an improving multichannel offer, increased levels of marketing, an expanding specialist value proposition, and a growing store portfolio.” - Greg Bromley, Conlumino