Dunelm sees FY profit 'modestly ahead' of forecasts

Homewares group Dunelm said it expected to finish the year “modestly ahead” of expectations as it reported a 16.8% fall in third quarter sales, reflecting the impact of the latest national Covid lockdown.

The company on Thursday said total sales fell to £236.6m in the three months to March 27 as the pandemic shuttered all its stores, although declines were offset by a rise in online shopping, which represented 92.4% of the total figure, up 70 points on 2020.

Dunelm said the current range of pre-tax profit estimates was £120m - £125m and expected a "strong consumer response" when non-essential shops were allowed to re-open their doors next Monday.

The firm had net cash of £40.2m and access to £175m of approved banking facilities which are still unused. Dunelm spent £90m as working capital during the period. Analysts at Peel Hunt said the cash position could be a precursor to a potential autumn special dividend.

Click-and-collect orders covered approximately 35% of in-shop sales from the same period last year as Dunelm was forced to shutter all its 174 stores when the current national lockdown was imposed on January 4.

"In a quarter when we were largely unable to open our stores, it has been very encouraging to see the strength of our digital channels which have enabled us to cover over 83% of sales from the same period last year," said chief executive Nick Wilkinson.

"This resilient performance is testament to the commitment and dedication of our teams, who continue to adapt and innovate the Dunelm customer proposition."

"We are now looking forward to re-opening, with colleagues ready to welcome back customers through our doors. We have worked hard to rebuild inventory levels and our stores are well stocked across our extensive product range."

Neil Shah, director of research at Edison Group said Dunelm remained focused on "innovating and improving its customer proposition, as well as supporting its growth in home delivery and Click & Collect operations".

"With Dunelm also looking to invest and refit stores across the country in preparation for lockdown measure easing, it is well placed for a better end to the year," he said.