Dunelm sales shrug off 'challenging' market - but Budget impact weighs
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Dunelm shares fell on Thursday as the group flagged 'challenging' market conditions and additional 'cost headwinds' heading into the second half of its financial year. The Leicestershire-based homeware retailer's turnover grew 1.6 per cent to £490million in the 13 weeks ending 28 December and by 2.4 per cent to £894million over the first half of its financial year.
Online purchases as a share of total sales grew by three percentage points in both periods, to 40 per cent in the second quarter and 39 per cent in the first half, thanks to rising click-and-collect sales. Dunelm noted strong demand for furniture products, including dining chairs, coffee tables and sofa collections.
Nick Wilkinson, chief executive of Dunelm, said customers responded well to the 'value and choice we offer' amid a 'challenging environment'. Weak consumer confidence and the glacial pace of Bank of England interest rate cuts has weighed on demand for homeware and property refurbishment.
Dunelm has bucked the trend with continued sales growth, which it has partly attributed to expanding its ranges and relatively high demand among younger consumers. But the firm warned that the forthcoming rise in National Insurance rates announced in the Autumn Budget represented an 'additional cost headwind' and the trading environment ahead remained uncertain.
Brighter room: Dunelm noted strong demand for furniture products, including its dining chairs, coffee tables and sofa collections. From April, employers will pay a 15 per cent levy on annual staff salaries exceeding £5,000, up from the current 13.8 per cent on wages above £9,100.
