Dunelm LFL sales up but margins hit
Homeware retailer Dunelm reported a jump in total like-for-like sales on Wednesday, but said the addition of Worldstores - which it acquired last November - has hit margins.
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In the 13 weeks to 30 September, total LFL sales were up 9.3% to £214.3m, with total group sales up 24.8% to £247.9m. The company said LFL sales were boosted by favourable weather comparatives and “strong” growth across the business, especially online, where LFL sales grew 46% to £19.9m.
Dunelm said its group gross margin in the quarter was in line with its expectations, 220 basis points lower than last year. It attributed the drop to the mix effect of the addition of lower margin Worldstores sales, which reduced gross margin by 120bps. In addition, the company said a focus on newness in its latest ranges and the planned higher seasonal sales mix dented margins in the quarter by 100 basis points.
For the full year, Dunelm expect the gross margin, combining store and online, to be in line with the prior year.
Chairman Andy Harrison said: “The integration of the Worldstores business continues on plan, with good progress in the quarter. We are well on the way to becoming a genuine multi-channel retailer, with 16% of sales in the quarter online (19% including Reserve and Collect).
"We head into the second quarter having opened a number of new stores and with an improved seasonal offer for the Christmas period, which we're sure will resonate well with customers."
The group opened five new stores in the period, taking its superstore footprint to 165 stores. In addition, it has legally committed to a further five new stores, one of which is a relocation, all of which are due to open before the end of the calendar year.