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Dunelm remains committed to store expansion

Published: 17 February 2011
Homewares retailer reports strong trading in first half and stands firm in plans to open up to 100 superstores, despite concerns over "fragile consumer confidence".
Dunelm remains committed to store expansion
Dunelm Mill reported a sales increase of 8.5% to £275.7m for the 26 weeks ended January 1, 2011. Like-for-like (lfl) sales were down 1.2%, due to a drop in footfall during the adverse weather in November and early December. However, the firm explained that the lfl decline was against a "very strong comparative" growth of 15.4% in the same period last year.

Gross margin was up 110 basis points to 49%, while pre-tax profit saw a 5% increase to £48.5m.

Incoming chef executive Nick Wharton said that Dunelm remains "cautious regarding the fragility of consumer confidence", but the retailer insists that it is still committed to its target of achieving "full national coverage, estimated at 150-200 superstores".

The out-of-town housewares retailer opened superstores in six new locations in H1, taking its total to 100, in addition to its 10 high street shops. Dunelm has already committed to a further three units this financial year and has another seven units in the pipeline for next year, including two relocations.

While operating costs increased by 14.3% to £10.9m in the first half - of which £8.4m was driven by new stores - the upward trend in gross margin, due to increased selling prices, and rise in overall sales growth, resulted in a 5.4% increase in operating profit to £48.4m.

Online sales also reported strong growth, said the company, and Dunelm believes there is opportunity to drive its online channel "much harder in the future".

Mr Wharton, who joined the business in December, formally took up the role of chief executive today, succeeding Will Adderley, who moves to the to the position of deputy chairman.

He said of the results: "These half year results once again demonstrate Dunelm's many strengths and are a credit to everyone involved with the business. We have a clear and proven strategy for growth through ongoing store portfolio development. The addition of a more ambitious multi-channel dimension represents a further exciting and achievable opportunity to continue the success of recent years."

Will Adderley added: "After exceptional growth in sales and profits in the equivalent period last financial year, the most recent half year has been a period of consolidation. In this context it has been a substantial achievement for the business to record another profit increase as well as continuing its record of strong cash generation.

"I am delighted to welcome Nick to his role as our new chief executive and look forward to working closely with him as we continue to grow the business in the months and years to come."


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