Shares in Dunelm Group plc (LON:DNLM) hit a record high on Wednesday following its sixth profit upgrade in a year.
The FTSE 250-listed retailer has been outperforming its peers, some of which could take inspiration from its business model, analysts say.
READ: Dunelm to beat profit forecasts as winter sale goes well
John Lewis Partnership, for one, has been struggling to sell its homeware over the key Christmas period.
The dismal trading was followed by the decision to stop releasing weekly sales figures in the new financial year.
Despite targeting a more affluent customer, the employee-owned department store does have a lower-priced homeware brand called ‘House’ which could do with an extra push.
Patrick O’Brien, research director at GlobalData, told Proactive the range should be extended, ensuring it can compete with Dunelm’s offering in terms of style, value and quality.
The brand has been doing “quite well”, O’Brien said, though it is “difficult” for John Lewis as it does not want to pitch itself as a lower-budget destination.
READ: John Lewis to stop releasing weekly sales figures after dismal trading
But Dunelm is not a discount operator, although it manages to steer shoppers away from the likes of B&M European Value Retail SA (LON:BME) and Home Bargain.
“[Dunelm] concentrates on offering different products in the same category at different price points, so it enables it to really focus on creating very good value,” O’Brien commented.
On top of that, there is an effort in providing fashionable items, which some of its competitors are lacking, O'Brien added.
Dunelm is also bearing fruit from its new website launched in November, with improved speed and the option to buy through ‘click and collect’.
In fact, online sales in the first half of the financial year climbed 33%, for total revenue up 6% to £585mln, pushing gross margins up 1.2% to 51.5%.
The furniture, cushions and curtains retailer said the third quarter started “well”, with management plumping profit expectations to the top end of the £135mln-£137.3mln range.
“The growth in customer numbers and Dunelm’s digital capabilities means the group is increasing its relevance in the space,” analysts at house broker Peel Hunt commented.
The share price, which has nearly doubled in a year, jumped 6% to an all-time high of 1,272.9p, valuing the company at £2.5bn.