14th Jul 2021 08:44
(Alliance News) - Dunelm Group PLC on Wednesday said strong reopening trade continued, with the homewares retailer expecting annual profit to top forecasts.
For the new financial year, the FTSE 250 constituent is cautiously optimistic, tipping a surge in home improvement demand to continue, though it noted economic uncertainty. It also earmarked plans to increase its levels of investment.
Dunelm shares were 3.1% lower at 1,395.00 pence each in London on Wednesday morning,
Dunelm's sales in its financial fourth quarter that ended June 26 were up by more than double annually to GBP380.1 million, although last year's comparatives were much easier due to the first national lockdown in the UK.
Compared to two years earlier, so before the onset of the pandemic, quarterly sales were up by 44%.
"Sales in the weeks following re-opening on 12 April were exceptionally strong, partly reflecting pent-up demand. However, sales also remained robust for the remaining weeks of the quarter despite us delaying our usual Summer sale event," Dunelm explained.
"The homewares market showed further growth throughout the quarter. Encouragingly, since the re-opening of our stores in April, we have delivered sales growth materially ahead of the market and have gained meaningful share over the full year. This is despite significant periods of store closures during which some of our competitors were allowed to remain open."
For the full financial year, sales were 27% higher annually at GBP1.34 billion and 21% higher than pre-pandemic levels.
Dunelm expects annual pretax profit of GBP158 million, slightly topping analyst forecasts and up 45% from GBP109.1 million in financial 2020. Dunelm noted the current analyst range for pretax profit is GBP149 million to GBP153 million.
It raised its profit outlook on the back of the continued strong sales and better-than-expected margins. Gross margins increased by 460 basis points yearly in the fourth quarter.
"This increase was higher than previously anticipated due to the decision to postpone our Summer Sale, which would normally be complete by the end of Q4, into the start of FY22," Dunelm explained.
Looking ahead, the company expects to see a "continued appetite" for home improvement, which has surged due to Covid-19 lockdowns forcing consumers to spend more time indoors.
"Whilst the macroeconomic outlook remains unclear, and we have strong comparatives in the first quarter, we are well-placed to further expand our market share through ongoing improvements to our customer offer," Dunelm added.
"We will increase investment levels in FY22 to enable our growth ambitions, investing in our digital and data capabilities, store experience and commercial capabilities, as well as in our supply chain."
By Eric Cunha; [email protected]
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