Dunelm Group PLC (LSE:DNLM) has said it expects pre-tax profits for its fiscal year to be above current market expectations although margins are forecast to fall in the second half.
In a trading update, the company said total sales of £478mln in the last quarter were 18% higher than the same period a year earlier and up 48% compared to three years ago, pre-pandemic, as its Autumn and Winter product ranges proved particularly popular with customers.
Dunelm said customers sought ways to mitigate increased energy bills through its “Winter Warm” range as well as in products such as heated indoor airers.
Growth was seen both in stores and online, with digital sales making up 35% of total sales in the quarter, 2 percentage points (ppts) higher than the same period last year.
Digital sales growth was particularly strong in the late Autumn and run-up to Christmas, the company said.
The timing of its Winter Sale also provided a benefit of around 4 ppts to the sales growth rate in the quarter, an impact which will reverse in quarter three, the company said, while as expected, gross margins slipped in the first half by 170 basis points to 51.1%.
Guidance for full-year margins of around 50% remains unchanged with gross margin in the second half anticipated to be lower than the first half due to the two sale events in the second half of the year.
But overall the group said pre-tax profits for the full year will be above current market expectations with the company putting the current market range at £131mln to £186mln.