National homewares chain Dunelm has reported strong sales over the past year, but warned Brexit uncertainty could hit its peak trading period in the run up to Christmas.
Turnover at the business, which has its national headquarters in Syston, Leicestershire, topped £1.1 billion in the year to June 29 – up almost 5 per cent on the previous 12 months.
Increased sales, particularly online, along with better margins meant that – while other big retailers battle the high street downturn – Dunelm’s profits were up 25 per cent for the year at almost £126 million.
However shares in the business were down 10 per cent this morning after chief executive Nick Wilkinson warned that Brexit could impact on its peak trading period.
Mr Wilkinson said: “ As Dunelm celebrates its 40th anniversary, we are pleased to have delivered a strong performance during the year, with an improvement across all our customer, operating and financial metrics.
“In particular, the strong like-for-like revenue growth, both in stores and online, demonstrates the progress we are making with our multichannel proposition whilst maintaining the breadth and depth of our specialist customer offer in homewares.
“These results reflect our focus on the core Dunelm business and we see further opportunities to develop our Customer 1st plans, through extending product choice and value, improving our customer experience enabled by technology, and bringing more people to the brand.
“Recent trading performance has continued to be strong, reflecting both weak comparatives in the prior year and continued market share growth.
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“However, we remain cautious about the full year outlook due to increased Brexit uncertainty and specifically the impact it may have on consumer spending as we enter our peak period.
“Looking to the future, I am excited about the opportunity to grow our business as we enhance and extend our specialist and multichannel offer, build on our market leading position and fulfil our purpose of helping everyone create a home they love.”
In its results for the year, Dunelm said it had spent 18 months trying to identify and mitigate any risks arising from Britain leaving the EU.
Even though the business imports less than 1 per cent of its goods from European countries, it said there was a risk from potential disruption at deep-sea ports following Brexit, especially in the case of a no deal.
It said: “During the year, we took some actions to mitigate these risks, such as purchasing incremental stock of some best-selling lines and securing additional supply chain capacity.
“However, the latest anticipated date for Brexit is just ahead of our peak trading season and therefore, whilst we see no need for stockpiling product, we have chosen to accelerate some of our seasonal product flows to ensure they have been received ahead of the proposed exit date.
“Approximately 3 per cent of our employees are EU nationals and we are ensuring that they are kept up to date with the latest information from the 海角视频 government.
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“They will also be receiving our support to obtain ‘settled status’ if and when needed.
“Like other retailers, we remain exposed to any impact Brexit may have on currency and more importantly consumer confidence and the markets we operate in.
“We are hedged against a sudden decline in the value of Sterling against the US dollar. The impact of significant macro-economic disruption to demand in the homewares market is difficult to predict and therefore we remain cautious.”
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Russ Mould, investment director at stockbroker AJ Bell said: “In stark contrast to many other retailers, Dunelm doesn’t need to search for excuses to explain its performance as everything seems to be going swimmingly.
“It appears to know how to do retailing well; give customers what they want and do everything you can to make their shopping experience enjoyable.
“But why is it doing so well when others aren’t?
“One can speculate that a slowdown in the housing market has prompted many people to rethink plans to move home and instead do up their existing property – thus creating a reason to visit Dunelm’s stores or shop on its website.
“Dunelm itself suggests it is doing well because people now think of the brand for a broader range of items than the historic association with quilts and curtains.
“Also benefiting its cause is a predominantly value pricing model, making its goods affordable to a large market.”