Dunelm makes further gains and outlines furniture growth plans

Dunelm saw total sales more than double YoY, and grow by +43.9% Yo2Y in Q4 (to 26th June 2021).

Digital sales growth remained strong throughout the quarter, up +38% YoY, and the retailer enjoyed a positive customer response to the reopening of its stores. As previously announced, sales in the weeks following reopening on 12th April were “exceptionally strong”, partly reflecting pent-up demand. However, sales remained robust for the remaining weeks of the quarter, despite Dunelm delaying its usual summer sale event.

Sales growth came from a broad range of categories including bedding, curtains, bathroom textiles and cushions, and newer categories such as dining furniture and decorative accessories.

Dunelm says that Click & Collect, representing approximately one quarter of total digital sales, continues to be a popular customer choice, even with stores fully reopened.

Overall, sales were supported by good growth in active customers and across all cohorts – including those recently acquired. 

Based on GfK data, the homewares market showed further growth throughout the quarter, says Dunelm, which reports that since its stores reopened it has delivered sales growth materially ahead of the market, and has gained meaningful share over the year despite significant periods of store closures during which some of its competitors remained open. “We continue to see many opportunities to expand our market leadership, harnessing an increasing consumer focus on the home, combined with ongoing improvements to our product offer and service proposition,” states the retailer.

Dunelm says it will maintain its focus on driving sourcing gains to mitigate ongoing cost price pressures across the supply chain, and expects to return to a normal trading calendar in FY22, which will result in three sale events in the financial year as opposed to the usual two.

It anticipates that profit before tax for the full year will be approximately £158m, slightly ahead of analyst forecasts.

Nick Wilkinson, Dunelm’s CEO, comments: “Although our stores were closed for more than a third of the year, our strategy of investing in our digital capabilities allowed us to adapt to the changing environment and deliver strong growth.

“From what we have learned during the pandemic about our customers, colleagues, suppliers and our other stakeholders, we are more confident than ever about the opportunity to increase our market leadership and we will invest further in our proposition to support our growth ambitions. With many exciting developments in the pipeline to make us the first choice for home, and grow our customer base and frequency, there is a lot to look forward to.”

During Q4, Dunelm committed to two additional distribution facilities to create capacity for growth. The first is a new facility at the Daventry International Rail Freight Terminal (DIRFT) development in the East Midlands, which will expand both its capacity and capabilities for “heavy and bulky” storage, and enable it to expand its Home Delivery Network (HDN), underpinning its plans to grow its furniture proposition.

The second is a standalone site in Stoke, located in close proximity to Dunelm’s existing warehousing and distribution campus, which will be dedicated to centralised ecommerce fulfilment.

In other news, the retailer has appointed Vijay Talwar as a non-executive director. Vijay will join the board on 1st October, and will be a member of the Audit and Risk, Remuneration and Nominations committees.  

Vijay is an executive committee member at Foot Locker, Inc, the New York-based athletic retailer, where he is executive VP and CEO of Europe, Middle East and Africa. Overall, he holds a wide range of commercial experience from companies such as Sears Holdings and Blue Nile, Inc, The William J Clinton Foundation, India, and EL Rothschild.

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