Dunelm today reported a 14.6% increase in pre-tax profits to £59.8m while like-for-likes rose 2.2% in its interim results. The City reacted positively to the figures.
“The biggest opportunity to our minds remains the potential to become a national brand, with Dunelm’s brand awareness remaining fairly low relative to the size of the business. We see online and store expansion into the South East as key to this.” – John Stevenson, Peel Hunt
“The retailer is also gaining more traction at the more premium end of the market, benefitting from newer shop-in-shop design environments and the expansion of higher quality lines including Plum Circles and Waters & Noble. More recently, investments in instore systems are freeing up staff time to provide further added value service.
“Combined with its renowned made-to-measure curtain service, these initiatives are successfully stretching the Dunelm brand from its ‘market stall’ roots to mid-premium levels, leaving it better placed to take advantage of polarised demand.
Progress is also being made online, where Dunelm has traditionally lagged many of its competitors. With online sales now reportedly 4% of total revenue, Dunelm is building its multichannel presence; its reserve and collect service is being effectively leveraged through its out-of-town stores. Allied with a product catalogue trialed in Autumn 2012, Dunelm is taking steps to ensure it remains top-of-mind for homewares purchases.” – George Scott, Conlumino
“The company has a clear niche in a category, where competition is fragmented and has, we believe, also a great opportunity to improve gross margins (currently around 50%) by growing own label, direct sourcing and developing a multichannel platform. In addition, it has further opportunity to roll out new stores and currently has 123 superstores with a development potential for up to 200.
“The homewares market though is becoming more crowded and the stock, however, has been a great performer over the last year rising by almost 60%.” – Freddie George, Cantor
“As the brand’s visibility continues to grow in a lackluster housing market, causing home owners to instead refresh home décor, we reiterate our Buy rating.” – Jean Roche, Panmure Gordon