Shares in homeware retailer Dunelm Group dropped as it announced rising full-year sales and profits despite a tough consumer landscape.
At £11.66, Dunelm’s share price was last dealing 6% lower in Tuesday business.
Revenues at the homeware retailer rose 3.8% in the 12 months to 28 June, to £1.8 billion, which it said reflected volume increases alongside a rise in average product prices.
Dunelm said “the rise in average item values was primarily due to the mix of products sold, rather than headline price increases, as we continue to work hard on broadening the appeal of our ranges.”
The FTSE 250 company’s share of the combined homewares and furniture markets rose to 7.9% from 7.7% previously, it added.
The number of active customers on Dunelm’s books rose 80 basis points year on year, it said. Digital sales accounted for 40% of total turnover -- up from 37% in financial 2024 – with the business experiencing strong growth in the Click & Collect segment.
Profits Rise
Elsewhere, Dunelm said gross margins improved to 52.4% last year from 51.8% previously. This helped push pre-tax profits 2.7% higher over the period, to £211 million.
Net debt rose to £102 million at the year’s end from £55.6 million at the same point in 2024. This pushed its net debt to EBITDA margin to 0.3 times from 0.2 times.
This reflected higher capital expenditure in the period, Dunelm said, chiefly due to acquisition activity. This included the purchase of soft furnishings retailer Home Focus, marking its entry into the Republic of Ireland; and the acquisition of luxury home decor brand Designers Guild.
Dunelm raised the ordinary full-year dividend to 33.5p, up 2.3% year on year. It also paid a special dividend of 35p, matching the supplementary reward dished out the previous year.
Handover At The Top
Chief executive Nick Wilkinson said “I’m pleased to report another successful year, marked by growth in sales and profits, increased market share and meaningful strategic progress.”
Wilkinson – who will give way to Clodagh Moriarty on 1 October after seven years the helm – added that “this has also been a year of milestones for our business; opening our 200th store and first inner London location, expanding Click & Collect, extending our UK Made-to-Measure manufacturing, entering our first market outside the UK, and buying the brand and archive of Designers Guild.”
Dunelm said it was “pleased with early trading in the new financial year.” However, it added that it is “yet to see signs of a sustained consumer recovery.”
Uncertainty Remains
Analyst Adam Vettese of eToro noted that Dunelm’s solid results were “supported by stronger online channels, efficient store rollouts and in-house design and sustainability initiatives that appeal to value-conscious but style-driven shoppers.”
He added that “fast homeware’s influence is increasingly apparent as customers want faster refreshes, seasonal launches and social media led discovery, all of which play to Dunelm’s strengths in agile product development and marketing.”
However, Vettese also noted that “risks remain as [consumer] preferences change so quickly. He added that “Dunelm’s management remains cautious around ongoing cost inflation and no clear signs of consumer recovery points to a potentially tougher environment in the months ahead.”
This article was written by Royston Wild from Forbes and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.