In these times of tough trading and hard-to-come-by bank lending, you don’t often read this sort of thing in a preliminary results statement.
“The group cancelled its committed bank facility under a revolving loan agreement with Lloyds Banking Group of £40m. In light of the group’s financial strength, the board concluded that access to external funding would not be required in the near term.”
That was from Dunelm, the value homewares specialist that seems to be doing a pretty good job of running a tight ship while continuing to grow profitably – the holy grail of retailing right now.
In its last financial year the retailer was able to record a gross margin gain of 120 basis points, like-for-like market share gains and a 10% rise in operating profits.
Efficiencies and initiatives were evident in equal measure. The cost of store refits was cut by about 25%, enabling capital to be directed to where it would deliver the greatest financial returns.
At the same time systems improvements enabled the retailer’s staff to spend more time dealing face-to-face with shoppers without any extra labour cost, improving the level of customer service.
While multichannel sales are growing, Dunelm continues to open shops. It has 104 superstores and another nine will open before Christmas. Dunelm has funded expansion and improvement out of current cash flow, even though last year set a record for capital investment by the retailer – testament to its financial strength.
The stats indicate that Dunelm remains on a roll. Its value proposition means it is in tune with an austere mindset but it has made the most of those credentials to win new custom and cater even better for customers.
But when the consumer downturn ends, Dunelm looks as if it will be one of the retailers to emerge with both stronger internal disciplines and enduring consumer appeal.