Dunelm profits surge on new strategy but Brexit uncertainty looms

Homewares chain Dunelm Group has unveiled surging profits and greater market share, but it warned next year’s performance is still uncertain on account of Brexit.

Pre-tax profits jumped 35.2% to £125.9 million in the year to June 29, as the company focused on its core Dunelm brand and encouraged more shoppers to visit both its stores and website.

Like-for-like sales growth in stores was 7.7%, while online it was up 35.1%.

Chief executive Nick Wilkinson said the momentum had continued into current trading.

“Recent trading performance has continued to be strong, reflecting both weak comparatives in the prior year and continued market share growth,” he said.

“However, we remain cautious about the full year outlook due to increased Brexit uncertainty and specifically the impact it may have on consumer spending as we enter our peak period.”

The results bring to a close Mr Wilkinson’s first full year at the helm.

Chairman Andy Harrison said the former Evans Cycles boss had been “central in leading our improved performance, re-energising our core skills, building new digital capabilities and focusing on the Dunelm brand”.

This time last year, Dunelm said it had closed the websites attached to Worldstores, a company it had acquired in 2016, and moved all the business to the core Dunelm brand.

The elimination of Worldstores product lines helped to boost margins in the year to June, as did renewed efforts to manage end of season stock.

Meanwhile the core Dunelm range has been expanded, a process which bosses said would continue in the current year.

Russ Mould, investment director at AJ Bell, said: “One can speculate that a slowdown in the housing market has prompted many people to rethink plans to move home and instead do up their existing property – thus creating a reason to visit Dunelm’s stores or shop on its website.

“Dunelm itself suggests it is doing well because people now think of the brand for a broader range of items than the historic association with quilts and curtains. Also benefiting its cause is a predominantly value pricing model, making its goods affordable to a large market.”

The group also separately announced on Wednesday that Paula Vennells, the former chief executive of the Post Office, is joining its board.

Shares were down more than 7% in early trading, despite the positive results and the announcement of a 32p special dividend bringing total shareholder payouts to 60p per share.