Dunelm on track for FY profit expectations as Q3 sales rise

(Sharecast News) - Homeware retailer Dunelm said on Thursday that it was on track to meet consensus expectations for full-year profit as it reported a jump in third-quarter sales. In an update for the 13 weeks to 29 March, the company said total sales rose 6.3% on the year to £462m, with broad-based growth across the homeware and furniture categories.

The retailer hailed "a good start" to its new Spring/Summer ranges, as well as a successful Winter sale at the beginning of the period.

Furniture categories performed particularly well again, it said, as extended ranges and "bolder designs" resonated with customers.

Dunelm said total digital sales made up 41% of sales, up 4 percentage points on the previous year as the group "continued to optimise the online customer experience, with AI-powered search and recommendations improving relevance and conversion".

The performance was also driven by strong Click & Collect sales, which again grew significantly in the quarter.

The retailer said FY25 pre-tax profit was set to be in line with consensus expectations of £208m and a range of £204m to £214m.

Chief executive Nick Wilkinson said: "We've had a good third quarter, with strong growth and further strategic progress. The Dunelm brand continues to attract a broad range of customers, offering outstanding value and quality, and we're really pleased with how our new ranges are being received.

"We remain committed to driving market share gains through growth across all our channels. March saw the opening of Dunelm's 200th store in Merthyr Tydfil, an exciting milestone, and we continue to see new opportunities, filling 'white space' in our physical estate through a variety of store formats. At the same time, we're improving customers' digital experience, including through Click & Collect, which has continued to gain momentum.

"Our customers are now enjoying getting their homes and gardens ready for summer and we're focused on being as relevant as possible for the warmer months ahead. We remain very mindful of the wider backdrop and the impact of increased uncertainty on consumer sentiment, but maintain our focus on strengthening Dunelm's position as The Home of Homes."

At 1035 BST, the shares were up 6.2% at 1,007p.

Russ Mould, investment director at AJ Bell, said: "Given the uncertain backdrop, investors will be thrilled with soft furnishings firm Dunelm's third-quarter trading.

"With retail it is really important to get the basics right and with its new ranges, Dunelm is stocking products which people want at a price they're willing to pay. A continued store roll-out and improvements to its digital offering are also helping.

"For now, this seems to be cushioning Dunelm from the impact of escalating macro-economic uncertainty, which could be an obstacle to households loosening the purse strings.

"A roll-out of self-service tills should help boost efficiency as the company looks to contend with rising costs associated with changes to the national living wage and employer national insurance contributions in last year's Budget.

"The business continues to face the tricky task of replacing Nick Wilkinson, who announced plans to step down in February. There was no update on this process in today's update and Wilkinson is sticking around until a successor is appointed.

"A 57% share price advance since his tenure began in 2018 is no mean feat given the challenges the retail space has faced in that time and he has been particularly instrumental in transforming the company's online strategy."