Dunelm sales beat expectations despite warm weather footfall impact

Dunelm Group PLC on Thursday said it expects full-year pretax profit in line with consensus after modest sales growth in the fourth quarter of its financial year.

The Leicester-based homewares retailer said sales grew 2.9% year-on-year to £428 million in the 13 weeks that ended June 27, taking sales for the financial year to £1.83 billion, up 3.1%.

Growth in the recent three-month period was slower than the 4.0% rise reported in the fourth quarter of the last financial year, but ahead of the 2.3% growth expected by company-compiled market consensus and higher than the 2.1% rise in the prior quarter.

This was achieved despite trading being hurt by two separate weeks of "exceptionally" warm weather in the UK, during which Dunelm saw lower levels of footfall.

The first of these also coincided with the opening week of the Summer sale, which disproportionately hurt trading, the retailer noted.

As a percentage of sales, digital rose by three percentage points on-year to 45% for the 13 week period and by two percentage points to 42% for the financial year as a whole.

Full-year gross margin of 52.5%, was up 10 basis points year-on-year, with further growth held back by customers "increasingly participating in our promotional events, especially in the second half of the financial year."

Cash generation was again strong in the full-year, with around 70% of operating profit converted to free cash. There was a small inflow for the year from working capital, with inventory in particular lower year-on-year.

Overall, Dunelm expects full-year pretax profit in line with previous guidance and current consensus expectations of £210 million, which would be little changed from £211 million in the financial year prior.

Shares in Dunelm rose 4.2% to 852.00 pence each in London on Thursday.

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