Dunelm resumes dividends as sales rise 23% on last year

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Dunelm Group PLC (LON:DNLM) resumed dividend payments as first-half sales rose 23%, although the retailer warned that sales in the current quarter were affected by COVID-19 lockdowns.

Home delivery and Click & Collect services are covering 70% of last year’s sales its current quarter and at this level the company is making a “modest” weekly loss, it said, adding that it was unable to provide meaningful guidance on the outlook for the full year due to uncertainty as to when COVID-19 restrictions will be lifted.

Homeware retailers were deemed ‘non-essential’ in the November and the current lockdowns, although they were trading during previous closures.

READ: Dunelm worries market with losses forecast but analysts remain bullish

All but one of the FTSE 250 group’s 174 stores are shuttered and it’s not clear when they will reopen.

Following a strong half-year performance, the cushions and towels seller resumed dividends with an interim payout of 12p per share.

In the 26 weeks to December 26, sales surged 23% to £719mln, with profit before tax up 34% to £112mln after repaying £14mln to the government for the furlough scheme. The prior year’s £67mln debt turned into £140mln net cash at the end of the period.

Digital sales rocketed 111% while the business as a whole benefitted from increased demand for homewares as consumers turned their attention to home improvements during the pandemic.

“A very strong balance sheet and the reinstatement of dividends means the market is cosying up to Dunelm as if it was one of the soft fleece throws it sells,” commented AJ Bell investment director Russ Mould.

“What Dunelm has done extremely well in terms of capturing this redirected spend is significantly upping its digital game… This investment of money and management resources paid off in spades as the various lockdowns saw its physical stores shuttered.”

“The disappearance of obvious competitors from the market, perhaps most notably department store chain Debenhams, could provide a further boost in terms of market share gains as society gradually reopens.”

Shares rose 3% to 1,296p on Wednesday morning.

–Adds analyst comment, shares–

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