Half-year numbers from homewares retailer Dunelm (DNLM) bucked wider retail trends, with like-for-like revenues up by 6.9 per cent, marking increases across both physical stores and online. This was driven by a considerable increase in customer numbers – a result of improved brand awareness – while gross margins widened from 48.6 per cent to 50.3 per cent thanks to improved sourcing, favourable foreign exchange rates and the removal of less profitable lines from the Worldstores acquisition.
Residual losses from the Worldstores deal still dented the bottom line by approximately £1m, while a £3.8m goodwill write-off also constricted reported earnings. But adjusted operating profits of close to £71m still marked a 15.3 per cent improvement year on year – demonstrating the group’s tight grip on operating costs, at least as a percentage of revenues.
Now for the second half. Bosses say the group "traded well" through the winter sales period, and are pleased with the current performance. Continued political uncertainty in the UK is still a reason for caution, but barring any “material change in the macroeconomic environment”, management still expects to meet full-year targets.
Analysts at Peel Hunt still expect pre-tax profits of £118m for the year ending June 2019, giving EPS of 46.4p, compared with £102m and 40p in FY2018.
| DUNELM (DNLM) | ||||
| ORD PRICE: | 744p | MARKET VALUE: | £1.5bn | |
| TOUCH: | 743-745p | 12-MONTH HIGH: | 770p | LOW: 461p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 77p | NET DEBT: | 47% | |
| Half-year to 29 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 545 | 56.3 | 22.3 | 7.00 |
| 2018 | 552 | 70.0 | 27.6 | 7.50 |
| % change | +1 | +24 | +24 | +7 |
| Ex-div: | 14 Mar | |||
| Payment: | 12 Apr |
