Dunelm sales soar after shoppers flock to stores as Covid controls ease | Retail industry

The homeware chain Dunelm has benefited from the reopening of its stores in the past three months, with sales 44% up on pre-pandemic levels as the home improvement boom continued.

Dunelm reported strong pent-up demand for homewares from customers who wanted to shop in person in its reopened stores for home furnishings including bedding, curtains, bathroom textiles, cushions, dining furniture and decorative accessories.

Sales doubled in the 13 weeks to 26 June, compared with a year earlier, when Dunelm’s stores remained closed during the first coronavirus lockdown. Total sales during the quarter were also 44% higher than the same period in 2019.

Online sales growth also remained strong even after the reopening of its stores in England on 12 April, up 38% year on year. Click and collect accounts for about 25% of digital sales.

As a result of its strong performance over the past quarter, the retailer is forecasting full-year pre-tax profits of approximately £158m, slightly ahead of analysts’ expectations, even though it stores remained closed for more than a third of the year.

The company’s sales remained robust despite its decision to delay the start of its usual summer sale, which also improved its gross margin.

Dunelm’s chief executive, Nick Wilkinson, said the company had invested in its digital capabilities during the pandemic to adapt to the changing environment.

“From what we have learned during the pandemic about our customers, colleagues, suppliers and our other stakeholders, we are more confident than ever about the opportunity to increase our market leadership and we will invest further in our proposition to support our growth ambitions,” Wilkinson said.

“With many exciting developments in the pipeline to make us the first choice for home, and grow our customer base and frequency, there is a lot to look forward to.”

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However, Dunelm warned of continuing disruption in its global supply chain as a result of the pandemic, and it is expecting to increase its stock levels over the next six months as a way of dealing with this. Higher stock levels will lead to some extra storage costs.

The chain is planning capital expenditure of £12m on two extra distribution facilities in the next year, to allow it to continue expanding. One new warehouse is being built at Daventry in the east Midlands – to store heavy and bulky items – and another in Stoke, close to its existing warehouse and distribution centre.

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