Curtains to cookware specialist Dunelm is forecasting a 20 per cent jump in profits, in defiance of the subdued consumer market.
The home furnishings chain, with 171 stores on retail parks around the Ƶ, said it expects pre-tax profits to hit £124-126 million in the year to June 29 – compared to £102 million a year earlier.
Its share price was up 8 per cent by 10.30am today on the back of the news.
In an upbeat trading update the business, which has its national headquarters in Syston, near Leicester, said: “Dunelm Group plc has continued to see strong trading across its business and therefore expects the outturn for its financial year to June 29, 2019 to be ahead of the board’s previous expectations.
“Since we last updated on April 10 2019, we have seen very good year-on-year total like for like growth, particularly in May and June, reflecting both the soft comparator period (Q4 2018, with total like-for-like growth of 0.1 per cent) and the unseasonably favourable weather conditions this year.”
In the spring, it reported that sales had been up 6 per cent in the first three months of the year, compared with the same time in 2018.
Not only that, but sales from its shops – as opposed to online – were also up, while competitors had seen their sales falter from high street and out-of-town stores.
Back then Dunelm said like-for-like store sales, which include only stores that had been open more than a year, were up almost 10 per cent for the quarter at just short of £226 million.
The business was number seven in the 2019 Leicester Mercury list of the Top 200 companies in Leicestershire, published this week, after turnover topped £1 billion last year.
Earlier this month another Leicestershire-based store chain announced it was also beating the consumer blues affecting big groups such as Top Shop owner Arcadia.
Joules, the country casuals clothes brand, reported a 17 per cent jump in sales in the year to May 26.
The business, which is building a new £20 million headquarters in Market Harborough, said online and instore sales had grown by more than a fifth in the year – reaching £159 million.
Chief executive Colin Porter put that down to the growing integration between the online operation and its 124 stores, which are now split 50-50 in terms of sales.
Overall group sales were up to £218 million.
Russ Mould, investment director at investment specialist AJ Bell said Dunelm caught the market by surprise at the start of the year with a decent trading update – and the positive news was continuing.
He said: “In April it said earnings would beat forecasts as long as there were no changes to current trends in consumer demand.
“And now it is back with its third bit of good news in 2019 by raising earning guidance yet again, confirming the retail sector still has some bright spots.
“The pillows-to-bedding specialist is clearly doing something right as the tills are ringing across its 171 stores and online.
“It says the weather has been a help, although initially you may think bad rain would prevent people from wanting to hit the shops.
“However, there is some logic to Dunelm benefiting from the recent unseasonable weather.
“Lower average temperatures will have seen more people stay indoors, in doing so they may have paid more attention to the interior of their home and thought about making small changes.
“Dunelm has broadened its product range to have a complete homewares offering, meaning it is a logical place to visit for interior upgrades.”
