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Shares I love: Dunelm

Dunelm’s online sales increased over 30 per cent during the first 10 weeks of 2020
June 16, 2020

Georgina Brittain, co-manager of JPMorgan Mid Cap Investment Trust (JMF), explains why she and her team have invested in home furnishings retailer Dunelm (DNLM).

“Many retailers were already in difficulty and struggling to make ends meet [even before the] Covid-19 outbreak. Retail has always been a competitive area and the move to online shopping has made it even more fiercely competitive. But I remain a big fan of a predominantly bricks-and-mortar retailer – Dunelm.

To survive and thrive as a retailer, data and technology are key. Dunelm has upped its game in terms of technology spend and the results speak for themselves. The company’s newly upgraded website has benefited from significant investment, and online sales were up by over 30 per cent over the first 10 weeks of 2020. Dunelm was already taking market share, prior to lockdown. And its website has been up and running throughout most of the lockdown, with only a temporary closure to ensure the safety of its staff, while maintaining a high level of customer service. And, at the time of writing, 150 of Dunelm’s 170 stores had reopened.

I strongly believe that Dunelm remains well positioned to keep taking market share from competitors struggling to keep up in terms of product offering, technology and marketing spend. The current crisis is accelerating pre-existing trends, with winners getting stronger.

Dunelm’s sharp focus on value for money also resonates with its customer base and, as the economic backdrop gets worse, this emphasis on value should further benefit the company.

Dunelm’s management team has used the lockdown as an opportunity for growth and acceleration, and deepened its all-important supplier relationships. 

And it was one of the first managements of a UK listed company to take a voluntary pay cut when the coronavirus crisis emerged – a sign of true leadership.”

Investors Chronicle rates Dunelm as a ‘buy’ on the grounds that it was delivering impressive sales and profit growth even as the market softened, and has a largely effective digital strategy.