Dunelm ups profit guidance as shoppers seek affordable home improvements

The homewares retailer’s total sales for the 52 weeks to 1 July, 2023, grew by 6% on a comparable basis, up 50% on pre-pandemic levels.

Due to its “robust sales performance, strong commercial disciplines and tight operational grip on costs”, Dunelm said it expects its profit before tax for the full year to be slightly ahead of current analysts’ consensus of £188m. 

Gross margin is expected to be in line with guidance of circa 50%.

According to a statement from the retailer shared with investors, Dunelm is now a “bigger and better business” with a “significantly improved customer proposition” and more consumers engaging with the brand. 

Sales from the retailer’s online business now make up 36% of total sales, compared with 20% in FY19 and 35% for the same period last year. 

In the fourth quarter, the retailer said its focus on product offer “continued to resonate strongly with customers”, with shoppers snapping up bedding and rugs during cooler weather and garden furniture selling strongly as warmer temperatures arrived. 

The retailer also reported strong volume growth during the quarter as it ran its summer sale and reduced prices on more than 1,000 lines. 

Chief executive Nick Wilkinson said: “The breadth and relevance of our product offer has continued to resonate with our home-loving customers over the last quarter of the year.

“This has been reflected in our strong financial performance despite the challenging broader consumer backdrop.

“Against this backdrop, our commitment to value is stronger than ever. During the quarter, we lowered prices on more than 1,000 lines and our customers were also able to take advantage of great offers in our summer Sale.

“We have a strong business model, with committed colleagues and suppliers who strive every day to improve our customer proposition. 

“We continue to focus on further strengthening our product mastery, developing our stores, enhancing our digital channels and building out our marketing ecosystem, in order to create an even better experience for our customers. 

“With these improvements to our customer proposition and business capabilities, we see a compelling opportunity for sustainable and profitable growth, and are confident about the future.”