Retailer feels at home with dividend increase as it eyes future profits

Dunelm has boosted its dividend payment as a sign of what the retailer’s chairman describes as its “future profit growth potential and our strong cash generating capability”.

The Leicester homewares giant has delivered an upbeat update on its performance in the second half of 2017.

Sales were up 18%, boosted by the Worldstores acquisition, while like-for-like sales were up 6%.

The growth in online sales outstripped both of those figures and are becoming increasingly important. Online is now responsible for nearly £1 in every £5 taken.

“The strength of our customer proposition has helped us to deliver a good sales performance in the first half,” said chairman Andy Harrison.

However margins narrowed because of competition and the typically-lower margins generated at the Worldstores sites.

Harrison added: “Our gross margin in the first half was lower due to the mix effect of acquired Worldstores sales and a higher proportion of end of season and seasonal products. We expect a more stable margin performance in the second half, which, together with reduced losses and increased integration benefits from the acquisition, should deliver good full year profit growth.”

Dunelm has increased its interim dividend by 7.7% to 7p.

It has welcomed new chief executive Nick Wilkinson to the business, who joined from Evans Cycles and began at Dunelm at the start of February.

“We are confident that Nick’s leadership skills and retail pedigree will help us to deliver our ambitious growth plans to build Dunelm as the leading multi-channel retailer in our space,” said Harrison.

Dunelm’s chief financial officer Keith Down is to leave the business in June “to take up a role closer to his family home”. While the retailer hopes to be able to appoint a replacement before Down departs, former CFO David Stead has been lined up as an interim appointment if needed.

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