Dunelm Group warns on cost of living, appoints Whitbread CEO as non-executive director

Dunelm Group shares gained 5.3% to 870.5p in early afternoon trading on Thursday after the company reported a 16% year-on-year increase in total sales to £1.5 billion in FY 2022.

The homewares retailer said digital sales made up 35% of total sales, representing an 11% slide against last year due to Covid-19 restrictions easing and physical stores reopening.

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Dunelm confirmed its FY 2022 sales and pre-tax profits slightly exceeded market expectations, with an anticipated pre-tax profit of £207 million reflecting a strong HY1 after stores reopened, and a positive trading performance in HY2.

The group noted a gross margin rate for the financial year of 51.2%, 0.4% lower than FY 2021 due to high customer participation in the firm’s June 2022 Summer Sale Event.

Dunelm said it expected a gross margin return to a long run average in FY 2023.

“Dunelm is a much bigger and stronger business than before the pandemic, with sales over 40% higher, due in large part to the huge strides we have made to develop our digital capabilities,” said Dunelm CEO Nick Wilkinson.

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“Our growth continues to be driven by increasing market share as our customer base further expands.”

Dunelm mentioned its macro-economic outlook remained unpredictable, and warned the cost of living crisis risked cutting into sales and profits in the coming year.

“The macro outlook remains uncertain and we cannot predict exactly how consumers will respond to the increasing pressures on their finances,” said Wilkinson.

“We are currently seeing customers adapt to this environment in their own ways, utilising  the breadth of our offer and price points across homewares; value and choice has always been at the very core of Dunelm, and we are intensely focused on continuing to strengthen this for our customers.”

“The business has successfully navigated previous periods of consumer uncertainty. With the inherent strength of our business model and strong operational grip, we have never been more confident about our ability to make the right long-term decisions for all of our stakeholders and to continue to grow our market-leading position.”

Non-executive director appointment

Dunelm also announced the appointment of Alison Brittain as an independent non-executive director and chair designate.

Brittain is set to join the Dunelm board on 7 September 2022, and will succeed Andy Harrison as chair before the end of his nine-year term in September 2023.

The move follows Brittain’s announced resignation as CEO of leisure company Whitbread, which she is expected to leave in early 2023.

“Dunelm is a company I have long admired as a customer and I love that it’s an entrepreneurial, purpose-led business with strong values and lots of ambition,” said Brittain.

“The last two years have reinforced the importance of the home in all of our lives, and I am delighted to be joining a team with such a fabulous track record of focussing on delivering value for customers and a company with fantastic opportunity for future growth.”

“I look forward to working with the Board and building on Andy’s achievements as Chair.”

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