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Shares have risen for Dunelm

Share price spikes as margins tumble

Shares in the furniture giant Dunelm grew roughly 6 per cent during early trading. This news has been unveiled following a spike in the retailer’s revenue.

Revenue for the company heightened 24.8 per cent in the 13 weeks to the end of September, making it £247.9m. Most of this growth was driven by online sales, which also leaped 46.2 per cent to £19.9m, which now accounts for approximately 16 per cent of sales, heightening 19 per cent when “reserve and collect” is included.

Though, margins for the group dropped by 220bps. This was due to the integration of lower-priced Worldstores, which was acquired just last year. The rest was according to “focus on newness” in the recent Dunelm ranges.

Just last month, Dunelm warned that tougher trading in the UK provided a tough backdrop for the firm. However, Neil Wilson, an analyst at ETX Capital, stated that warnings of this kind have become paramount.

“Under promising and over-delivering is a good approach for boards and investor relations departments, but are retailers overdoing ‘post-Brexit tough market conditions’ worries?" he said.

“It’s become almost a reflex, with mention in virtually every company update this year. UK retail sales numbers continue to show resilience yet the companies who earn their crust in this environment keep on stressing how tough it is.”

In the absence of a chief executive after John Browett's departure, chairman Andy Harrison said: "We have maintained the good momentum from the final quarter of the last financial year. Our like-for-like sales were boosted by favourable weather comparatives and, pleasingly, we continue to outperform the homewares market, with strong growth across the business, especially online."

He added: "We head into the second quarter having opened a number of new stores and with an improved seasonal offer for the Christmas period, which we're sure will resonate well with customers.”

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