Dunelm preparing for ‘strong response’ to reopening next week

Dunelm expects to slightly outperform market expectations this financial year as it prepares for a Covid-19 rule change which will allow non-essential shops to open again next week.

The home furnishing company said it had been propped up by online sales in the last three months,

The home furnishing company said it had been propped up by online sales in the last three months, and is on track to beat pre-tax profit forecasts, which analysts have set at between £120 million and £125 million.

It will be “modestly ahead” of these predictions – so long as most of its 174 shops can reopen on Monday and no further Covid-19 restrictions are introduced before June when its financial year ends.

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Dunelm said it expects a “strong consumer response” to shops reopening next week.

It will allow the company to take some of the weight off its website, which has provided a crutch to the retailer through the pandemic.

In the first three months of 2020, online sales were less than 23% of Dunelm’s total £284 million.

But in the three opening months of this year – Dunelm’s third quarter – that has ballooned to more than 92% of the total.

It represented a tripling of online sales compared with the same period last year, with the company offering customers deliveries to their door or the ability to pick up orders at a shop.

It helped ensure that total sales only fell to £237 million – 83.2% of last year’s levels.

Click-and-collect orders covered approximately 35% of in-shop sales from the same period last year.

“In a quarter when we were largely unable to open our stores, it has been very encouraging to see the strength of our digital channels which have enabled us to cover over 83% of sales from the same period last year,” said chief executive Nick Wilkinson.

“We are now looking forward to reopening, with colleagues ready to welcome back customers through our doors. We have worked hard to rebuild inventory levels and our stores are well stocked across our extensive product range.”

As people have been stuck at home with time on their hands, many have taken time to improve their flats, houses or gardens in recent months.

This has given a strong boost to the homewares markets, yet Dunelm said that it underperformed the rest of the market in the first three months of 2021.

That is partly because some supermarkets – which sell homewares alongside the food that makes them essential retailers – have been able to stay open.

Mr Wilkinson has previously said he agrees with rules that allowed his supermarket rivals to keep selling homewares even as Dunelm was forced to close.

“Some local districts tried to prevent that happening, but customers just said: ‘Look, I’m here, why can’t I buy a saucepan?’ And I think from a customer point of view, I’m sort of with them,” he said in February.