Dunelm continues to trade in line as Q3 revenue rises

The FTSE 250 company said like-for-like revenue growth was 4.6%, which continued the growth trend seen in the first half.

Organic online growth through Dunelm.com also remained strong, at 35.7% in the quarter.

The board said a year-on-year reduction in non-like-for-like online sales partially reflected the disposal of the Achica business.

In the quarter, Dunelm said its gross margin was approximately 15 basis points lower than the comparable period last year.

Core Dunelm margins were down 95 basis points, which the board said reflected the reversal of a one-off phasing benefit from retail price increases last year, and a continued higher proportion of end-of-season sales.

That was largely offset by improved Worldstores product margins year-on-year, which would apparently continue to benefit the fourth quarter.

In the final quarter, the board said it expected its gross margin to improve “significantly” year-on-year, largely reflecting the adverse impact of end-of-season sales in the fourth quarter of last year that the company did not expect to repeat this year.

“We retain our guidance that our second half margins will be broadly in line with our first half margins,” the board said in its statement.

Dunelm’s superstore footprint remained at 169 stores at the end of the quarter.

No further stores were opened in the quarter, or were currently expected to open in the remainder of the financial year.

As at 31 March, net debt was approximately £123.8m and daily average net debt across the quarter was £109.4m.

During the quarter, the company agreed with its existing syndicate partner banks to amend and extend its revolving credit facility for a further three years to March 2023, with two further one-year extension options.

Dunelm said it increased the maximum facility size by £15m to £165m.

The terms, fees and covenants remained the same as the prior agreement, and the company retained an accordion facility of £75m, although that remained uncommitted.

“We've seen a good sales performance over the quarter, with like-for-like sales of 1.2% in stores and 35.7% online, despite a challenging consumer backdrop,” said Dunelm chief executive Nick Wilkinson.

“Our continuing market share gains in the Homewares category reflect the underlying strength of our brand and operating model, and enhance our position as market leader.”

As a result, Wilkinson said the company’s expectations for the full year remained unchanged.

“Having joined in February I am increasingly excited about the opportunities available to Dunelm to develop and grow a truly multi channel proposition.

“I would like to thank my new colleagues for the work they have done to deliver significant improvements to customer satisfaction across all of our channels, as well as driving good sales performance.”