Following today’s release of Dunelm Q1 figures for FY2019/20, Amy Higginbotham, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Following an impressive FY2018/19, Dunelm has shown no signs of slowing down in the first quarter of its new financial year, seemingly unaffected by the challenges facing the homewares market during the period. Dunelm’s specialist credentials, wide range and affordable price points continue to resonate with homewares and furniture shoppers, allowing it to capitalise on consumer appetite to trade down from struggling competitors such as John Lewis.
“Dunelm’s group revenue rose by £14.4m to £262.6m, aided by soft comparatives and the closure of the burdensome Worldstores and Kiddicare businesses in Q1 last year, which has allowed it to focus on its stronger core business without distraction. Store l-f-ls continue to rise, up 2.9% to £219.9m during the quarter, as Dunelm continues to focus on driving footfall to existing stores rather than relying on expansion to drive sales, with only one store opening planned for Q2. Dunelm has also benefitted from locating stores in favourable out of town locations such as retail parks, which have been more resilient to declining footfall than the high street. Despite its strong performance, Dunelm’s share price fell 6% this morning, likely down to its forecast that any gross margin improvements achieved in the first half will be offset by “FX headwinds” in the second half.
“Dunelm’s continued investment in raising brand awareness also contributed to its strong performance. Its sponsorship of ITV’s “This Morning”, which will run until March 2020, and its new “Home of Homes” marketing campaign, which focuses on its wide range and broad appeal, will help Dunelm remain top of mind for homewares and furniture shoppers.
“Though Dunelm continues to report double-digit online growth, aided by the expansion of exclusive online ranges, it still has room to improve its digital capabilities. Its re-platformed website, which will eventually allow it to offer click & collect, will be rolled out during Q2 – Dunelm must ensure that the transition is smooth in order to minimise disruption ahead of the key festive trading period.”