Dunelm delivers Q3 growth; expectations remain unchanged

Home furnishings retailer Dunelm has reported a growth in third quarter sales.

According to its latest trading update for the 13-week period ended 1 April 2023, total Q3 sales were 6% to £423m from £399m against the same period last year. On a year-to-date basis, sales are up 5% to £1.2bn from £1.1bn.

Dunelm said that customers continue to respond well to its proposition, with broad based growth across its categories, both in stores and online, with digital sales representing 36% for the quarter, up 1%.

“As reported previously, the timing of the Winter Sale benefitted the sales growth rate in Q2 by c.4ppts, and negatively impacted the underlying growth rate in Q3 by the same amount. Our Winter Sale resonated particularly well with our savvy home-loving customers, who took advantage of exceptional quality and value across our categories and price points. We also saw a good response to our newly introduced designs this spring as we refreshed our core product ranges and added to our Conscious Choice range of sustainably-focussed lines, complemented by relevant seasonal items such as garden decorations and window dressings,” the retailer said.

“Our total retail system, comprising both our store estate and online offer, is serving us well, with strong growth in both channels. The new stores we have opened this year, which include both larger and smaller formats, continue to perform ahead of our expectations. Our investment in digitalising the business is also delivering strong returns, with digital sales making up 36% of total sales in the quarter, 1ppt higher than the same period last year.”

Dunelm added that gross margin was “consistent with our expectations; 30bps lower than last year”, which included a tailwind of c.50bps from the timing of the Winter Sale. “We continue to expect gross margin for the full year to be c.50%, with a lower gross margin in the second half due to our two Sale events.”

Dunelm expectations for the full year are unchanged with pre-tax profit to be in line with current market expectations (£185m, with a range of £171m to £198m).

Nick Wilkinson, Chief Executive Officer, commented: “We are seeing strong momentum in the business as customers continue to appreciate the quality and value across the Dunelm range, despite a challenging trading backdrop. This was apparent through our successful Winter Sale and the positive launch of our new ranges for spring and summer as customers look forward to longer days and outdoor living.

“As we continue to seize the many opportunities we see, we are investing for the long term and making good progress against our plans, which include the ongoing development and extension of our product ranges, building our customer data platform and optimising our marketing channels. These plans give us good confidence for ongoing success.

“Our core values continue to guide the business and during the quarter we passed the £1m milestone in funds raised for our charity partner, Mind. I am particularly proud of our colleagues’ efforts to support our communities at such an important time.”

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