Dunelm cautious on FY due to 'unprecedented' consumer worries
Homewares group sees 'modest' rise in profits after strong first half
Homewares group Dunelm sounded a note of caution about full year results due to “unprecedented” uncertainty caused by Brexit as it forecast pre-tax profits "modestly" ahead of estimates.
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The company said it expected interim pre-tax profits to come in around £70m after £3.8m in impairment charges. It reported second quarter revenues of £303m, up 2%.
“If the homewares market continues to grow at a similar rate to that experienced in the first half, we expect to deliver full year profit before tax modestly ahead of the top of the range of current analysts' forecasts,” the company said. The average full year estimate for profit before tax is £112m.
“Given unprecedented levels of uncertainty currently facing consumers and businesses in the UK, we remain cautious about our full year outlook.”
Total like-for-like revenue growth for the second quarter was 9%, which Dunelm described as “a pleasing result which builds upon the positive trading experienced in the first quarter”.
Second quarter like-for-like store revenue rose 5.7% year on year with like-for-like online revenue on Dunelm.com up 37.9%.
Total revenue growth of the continuing Dunelm business, including the benefit of changes to the store portfolio, was up 9.6%. The company last year closed its Worldstores and Kiddicare websites.
“We are now fully focused on delivering our core Dunelm customer offer...and we continue to invest in our new Home of Homes brand campaign,” the company said.
“This integrated marketing campaign across TV, radio and social media platforms is part of our 'Customer first' drive to reach new customers. It is early days, but initial results are encouraging.”
Dunelm said it expected to begin the launch of our its website to customers in the fourth quarter, slightly later than the third quarter that it had previously announced.
“The new platform will offer 'click & collect' to customers, and allow us to develop our multi-channel offer with greater agility going forward.”
Shares in the company rose more than 12% to 648.5p on Monday.
Analysts at RBC Capital Markets said the update should be taken well by the market today and "should be positive for sentiment on UK general retailers".
Analysts expect the new website to lead to better delivery options such as click and collect "which should provide a further boost to online sales in our view".
Those at UBS observed that much of the LFL improvement seemed to be from traffic, although conversions rates are also up, with external factors unlikely to have driven the trading acceleration.