GlobalData On Dunelm's Recent Trading Update

Emily Salter, lead retail analyst at GlobalData, a leading data and analytics company, offers her view on Dunelm's recent trading update:

“Dunelm has managed to continue to deliver growth in its Q2 FY2023/24, albeit a more subdued rise of 1.0%, as it came up against exceptionally strong comparatives of 17.6% in the prior year. Despite the ongoing pressures on discretionary incomes, consumers sought to protect Christmas spending and celebrations once again, with Dunelm’s proposition remaining attractive with its wide product ranges and price architecture. Growth was profitable and promotional activity managed, as its gross margin improved and its forecast full year profit before tax is in line with market expectations.

“The retailer reported that cook and dine did especially well, in line with specialist ProCook’s sales returning to growth (+3.0%) in its Q3 to 7 January, as consumers focused on preparing to host family and friends for meals over the festive period. Sales of warm, energy-saving items like thicker duvets and blankets will have been dampened by a warmer than average December, although demand will have risen sharply in January with the recent onset of cold weather combined with the increase in energy bills at the start of the year. Dunelm is well positioned to capitalise on this demand, with its “cosy zone” section on its website providing consumers with a one-stop-shop for these products.

“Dunelm opened three stores in the quarter to take its total to 183, including in Watford in an ex-John Lewis site, bringing its offer closer to a wider range of shoppers by being in a shopping centre, as opposed to its usual retail park locations. It will be interesting to see whether Dunelm continues to experiment with opening in more central locations – especially as it has competition with IKEA and B&M on this front, with the former eyeing up smaller format, more urban stores; and the latter opening in ex-Wilko sites, many of which are likely to be on high streets. Dunelm’s online proposition continued to excel, with its online penetration rising by 2ppts to 37% due to its huge product range – although it does not feel overwhelming due to the layout of the website and ease of filtering by different product characteristics – improved site speed and customer experience.”

Source : Emily Salter, GlobalData

Image : shutterstock.com / 280801874 

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