Shares in Dunelm Group (DNLM) jumped on Wednesday after the homeware retailer said it expects profit before tax for FY22 to come in “modestly ahead” of analysts' expectations.
The FTSE 250 firm said it has seen a strong start to the year with ‘encouraging’ sales growth in the first ten weeks of the new financial year, including a positive response from customers to its summer sale in July and a continued outperformance versus the homewares market.
As a result of its ‘excellent’ performance in FY21, the Directors of Dunelm have declared a final dividend of 23p, taking the full-year dividend to 35p, as well as a special dividend of 65p.
Despite stores being closed to customers for more than a third of the financial year, Dunelm reported strong sales growth of 26% which it said reflects the strength of its total retail system.
In particular, digital sales grew by 115% as the Group scaled its technology and operations to respond to the increase in demand, including significant expansion of its Click & Collect offer. Active customers grew by 8.5%, primarily driven by the strong growth across digital channels.
Commenting on today’s set of results, Nick Wilkinson, Chief Executive Officer of Dunelm Group said: "The digital investments we had made enabled us to rapidly adapt to the changing environment and deliver strong growth and an improved customer experience.”
Wilkinson said the retailer is emerging from the pandemic as a stronger and better business following its transition from a physical retailer to “a proven, digital first, multichannel retailer.”
Shares in Dunelm Group were trading 10.89% higher at 1,425p following the results.
Over the period, the Company delivered record profit before tax of £157.8m, up 45% compared to FY20, despite the very challenging conditions as it focused on its cost base.
Total operating costs came to £522.5m (FY20: £416.4m), representing an operating cost ratio of 39.1% (FY20: 39.4%) with the growth in costs largely driven by the higher sales volume.
"Whilst the macro-outlook remains uncertain and we are seeing some industry-wide issues such as ongoing supply chain disruption and inflationary pressures from raw materials, freight costs and driver shortages, we feel well placed to continue managing these challenges.
As the homewares market leader, but with only 9.1% market share, and with only 1.3% share of the furniture market, we have significant headroom to grow market share,” Dunelm noted.
During FY22, Dunelm said it expects to open three to five new stores, including smaller store trials, as well as to accelerate its store refit programme and decarbonisation initiatives.
Dunelm also plans to invest in supply chain capacity, expand its digital and data engineering teams and build new capabilities in areas such as product management and sustainability.
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