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Dunelm cautious over the short-term despite solid start to new financial year

The gross margin increased by 1.3 percentage points year-on-year following the elimination of lower margin sales from the Worldstores businesses

Dunelm
There was one new superstore opening in the first quarter (a relocation)

Home-wares flogger Dunelm Group PLC (LON:DNLM) said the new fiscal year has got off to a good start, though it remains cautious about the future.

In the 13 weeks to September 28, like-for-like (LFL) sales were up 4.2% on the same period a year earlier (when LFL sales were up 9.3% on the same period of 2016).

READ Dunelm to simplify the business as annual profit falls

LFL shop revenues rose 1.3% year-on-year while online revenues were up 33.3% on an LFL basis. The retailer is on track to launch its new web platform in the third quarter of the current financial year (i.e. the first quarter of calendar 2019).

Total group revenue edged up 0.1% to £248.2mln from the year before.

As of September 29, net debt was roughly £109mln, compared with net debt of £130mln a year earlier.

"We delivered a good trading performance in the first quarter. Our positive LFL growth highlights the strength of our customer offer which we are continually working hard to improve as we focus on our core business again under one brand, with one platform and one supply chain,” said Nick Wilkinson, Dunelm's chief executive:

"We continue to improve the multichannel experience for our customers and our stores play a vital role in this. I am pleased at the progress we are making with tablet-based selling in store to offer our full product range to all our customers,” he added.

Dunelm has tablets in its store that enable home delivery orders to be placed by customers.

"Whilst we are cautious about the months ahead due to the level of market and customer uncertainty, I see plenty of opportunity over the medium term as we continue our journey to become the leading multichannel retailer in our sector, helping our customers create homes they love.,' Wilkinson said.

Quick facts: Dunelm Group plc

Price: 1193 GBX

LSE:DNLM
Market: LSE
Market Cap: £2.41 billion
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