8th Jul 2014 07:50
LONDON (Alliance News) - UK homeware retailer Dunelm Group PLC Tuesday said it expects to report a higher pretax profit and revenue for the financial year just ended, boosted by particularly strong sales growth in the final quarter of the year, as the retailer continues to benefit from an improving UK economy.
Dunelm shares were amongst the biggest gainers on the FTSE 250 at market open Tuesday, but have since reversed direction are now down 1.8% at 808.24 pence.
Dunelm said it expects to report a pretax profit of GBP116 million for the year ended June 28, driven by a "solid trading performance in the final quarter" and a 7.8% increase in sales for the year as a whole to GBP730.2 million. This compares with a pretax profit of GBP108.1 million a year earlier on sales of GBP677.2 million.
Like-for-like sales in the fourth quarter were up 5.5% on the year before, and up 5.3% for the year as a whole.
Dunelm said overall sales growth was supported by new store openings and an increase in UK consumer confidence, as well as more mortgage approvals and transactions in the UK housing market. House buyers need to furnish their new homes.
The homeware chain, which trades under the brand name Dunelm Mill, continues to pump money into store expansion and to invest in both its in-store offer and its multi-channel offering, particularly in fulfilment.
The retailer also has been spending on brand awareness, including it first-ever television advertising campaign which it launched earlier in the year. Besides that, Dunelm has been growing multi-channel sales via its Dunelm At Home proposition, while improving customer services and expanding its product range.
Dunelm said its ongoing investments have strengthened its customer proposition and driven sales.
"These have all been well received by customers, and we expect the sales benefit from them to continue into the new financial year," Dunelm said in its statement Tuesday.
Dunelm said gross margin improved by 80 basis points during the year, on the back on more direct sourcing, and having benefited from the product mix.
"With a strong pipeline of new stores, further enhancements to our multi-channel capability and a positive response to the continuing development of our customer proposition, the board remains confident in the group's long-term growth prospects," said Chief Executive Nick Wharton in a statement.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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