Dunelm (DNLM) will release its results for the year to 27 June on 10 September. Already, we know that the UK’s homeware market-leader has enjoyed a storming start to the subsequent 12-month period. Indeed, thanks to pent-up demand, the timing of a summer sale and the reopening of stores, sales jumped by more than a half year-on-year in July, and by roughly a quarter in August.
True, such gains won’t find their way into Dunelm’s upcoming annual figures. But there is still cause for encouragement elsewhere. While the retailer announced earlier in the summer that store closures had pushed it into a loss-making position for April and May, a 20 per cent boost to sales in June took it back into profitable territory.
At the same time, other home product retailers such as DFS (DFS) and Topps Tiles (TPT) have acknowledged similarly hot trading activity - albeit the former has warned that some sales may have been pulled forward from later in the year.
Given the apparent aversion exhibited by many consumers towards hitting UK high streets, it seems fair to assume that Dunelm will benefit from the fact that the majority of its 173 stores are situated out-of-town. Meanwhile, the group's online sales channel has also stood the test of lockdown, with revenues here more than doubling in May and June.
E-commerce does tend to dilute margins, due to additional operational costs. That said, Dunelm will hope for sales to re-balance towards its physical stores in the coming months.
In July, the group said that it expected full-year pre-tax profits to range between £105m-£110m, down only marginally from the £126m figure that it recorded last year. Underlying net debt has been kept to around £35m, helped by delays to stock orders. We expect greater clarity on Dunelm’s working capital management within its results, which will shed some light on the the direction of its cash flows.
