Shares in Dunelm Group fell following the release of full-year trading numbers on Wednesday.
At £10.67 per share, the FTSE 250 company’s share price was last dealing 1.8% lower in the midweek session.
Revenues at the home furnishings retailer came in at £1.64 billion in the 12 months to June, up 5.5% year on year. This was helped by further improvements to its digital offering, which helped push internet sales to 36% of group turnover, up 1% year on year.
Dunelm said the number of active customers rose 2.8%, while its market share in the homeware and furnishings segment improved 40 basis points to 7.2%.
Gross margins declined by 110 basis points from financial 2022, to 50.1%. Meanwhile its operating costs to sales ratio increased by half a percentage point, to 38%.
This meant that pre-tax profit declined 7.8% over the period, to £192.7 million.
Free cash flow improved to £160.4 million from £153 million previously. But net debt ticked £6.9 million higher to £30.7 million.
Dunelm lifted the full-year ordinary dividend 5% to 42p per share. It also paid a special dividend of 40p for the period, up from 37p in the prior year.
Staying The Course
Chief executive Nick Wilkinson commented that “we have maintained our focus on enhancing our customer proposition, expanding our offer whilst staying fully committed to value and making every pound count. This has clearly resonated well with our customers, enabling us to continue growing both sales and market share.”
He added that “we are committed to raising the bar on value and joy for our customers and continuing to invest where we see good returns, so that we can seize the various opportunities ahead.”
The company said that it was “pleased with trading early in the new financial year” and said it expects both sales and pre-tax profit to increase.
“A Promising Picture”
Neil Shah, director at Edison Group, said that “while current market dynamics may remain capricious, Dunelm’s roadmap paints a promising picture.”
He said that “the retailer’s proactive stance in passing on cost reductions and expanding into new areas, such as nursery furniture and live plants, while staying laser-focused on value, is commendable.”
Adam Vettese, analyst at eToro, said that Dunelm’s full-year numbers “encapsulate retailers’ struggles perfectly over the past 12 months,” noting that “many of them are experiencing rising sales revenue but the soaring cost of stock and other running costs has chipped away at margins and profits.”
However, he added that there are “a lot of positives” in the company’s update, such as the company’s rising market share, improving online sales and cash generation.
Although consumer spending remains under pressure, Vettese said that “the firm’s focus on value… could see the conditions emerge to allow for further growth in the coming year.”
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