Homewares retailer Dunelm Group plc (LON:DNLM) left its full year guidance unchanged as it achieved sales growth in the third quarter despite a “volatile retail environment”.
Total revenue for the 13 weeks to 1 April 2017 rose 11.4% to £255.1mln as the company integrated UK furniture, home and garden business WS Group.
Dunelm bought WS Group, which owns the Worldstores, Kiddicare and Achia brands, for £8.5mln late last year. At the time WS Group was close to collapse as it struggled to make an annual profit despite sales of £100mln.
The business contributed £23mln of the group’s sales in the third quarter. Excluding WS Group, total revenue rose 1.0% to £231.3mln.
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WS Group is expected to break-even in the full year to 30 June 2018, Dunelm said, as the integration is “going well”.
Dunelm added that the homewares market remains in decline. Total like-for-like sales dropped 2.2%, reflecting a 4.2% decrease at Dunelm stores to £190.8mln. In contrast, home delivery sales jumped 21% like-for-like to £21.7mln.
During the period, the company opened two new stores, bringing the total to 159. Dunelm plans to open a further five stores, including one in the current financial year and two in the early part of the following year.
The gross margin, excluding Worldstore, for the quarter increased about 75 basis points but Dunelm said this reflected a “short term benefit”, which will continue in the fourth quarter. However, the gross margin is expected to be broadly flat in the next financial year.
"We are trading in a volatile retail environment at present, but have continued to outperform the homewares market and so enhanced our position as market leader,” said chief executive John Browett.
“As a result, our expectations for the full year remain unchanged.”
Shares rose 0.56% to 626p in morning trading.