Dunelm shares sank as the homewares retailer’s new chief executive set out plans to accelerate growth and flagged a soft start to the new year due to the hot weather.
Sales rose 3.1% to £1,825m in the 52 weeks to 27 June, with the group nudging up its share of the UK homewares and furniture market to 7.9%.
Pre-tax profit was flat at £211m as higher sales and a slightly wider gross margin were offset by cost inflation, volume-related costs and continued investment in the business.
Cash generation was strong, with free cash flow rising to £155m, and the group lifted its ordinary dividend 2.2% to 45.5p, though it trimmed its special dividend to 25p from 35p.
Digital sales continued to grow, reaching 42% of the total, helped by the launch of the Dunelm app, which has been downloaded 740,000 times and gained an AI-powered shopping assistant in July. The retailer opened two new stores and reopened a third following a fire.
However, the company struck a downbeat tone on recent performance, saying an extended spell of unusually hot weather had significantly dampened sales in the first six weeks of the new financial year, though trading had improved as the weather cooled.
Alongside the results, Clo Moriarty, who became chief executive last October, launched a three-year strategy named “Winning Hearts & Homes,” which it said would be self-funded and build on its position as a homewares specialist.
“To capture our opportunity, we are launching ‘Winning Hearts & Homes’, a customer-led, self-funded plan to strengthen our market leadership position,” said Clo Moriarty.
“By building on the proven strengths that have made Dunelm so successful and by developing the capabilities that will support the next phase of growth, we believe we can create a bigger, better and bolder Dunelm for all our stakeholders.”
It didn’t seem to win investors’ hearts initially, and shares were down 9% shortly after the open on Tuesday.