Following today’s release of Dunelm’s figures for the 26 weeks ending 31st December 2022; Emily Salter, senior retail analyst at GlobalData, a leading data and analytics company, offers her view: “Dunelm’s H1 FY2022/23 was a tale of two quarters, with an exceptional Q2 (+17.6%) after a lacklustre Q1 (-8.3%) leading to a respectable 5.0% rise in total sales to £835.0m in its first half. The homewares specialist received a boost in the lead up to Christmas as consumers invested in homewares to keep warm with the aim to cut energy costs, such as thicker duvets and heated airers, and purchased items to celebrate the first COVID-restriction-free Christmas with friends and family at home. Dunelm needs to keep the momentum of its Q2 going as consumers cut back on spending after an expensive Christmas. Value for money will be key to consumers, and Dunelm should focus on promoting its more affordable homewares, particularly as consumers may wish to buy lower-ticket items impulsively if cutting back on more expensive items.
“Profit before tax (PBT) fell by 16.6% over the period due to the timing of its winter sale and inflationary cost pressures, but Dunelm is holding its previous guidance for its full-year PBT, and the retailer’s share price remains marginally up this morning. Dunelm gave no indication on current trading, except to say consumers had been ‘resilient’ so far, but also that the consumer outlook is unpredictable. However, Dunelm clearly remains positive given the absence of a change to its profit guidance and the retailer’s broad price architecture – supported by changing the mix of raw materials in some items and introducing self-build furniture – should boost its performance in 2023.
“Dunelm’s online penetration rose by 1ppt compared with H1 last year to 34% as consumers continued to buy online during the Royal Mail strikes over Christmas, but switched to Click & Collect instead to avoid any delays. Dunelm continues to invest in the online shopping experience, and will be trialling bookable consultations and live chats. The homewares leader is also seeking to remain competitive with retailers offering finance options, such as Next; in H1, Dunelm started offering PayPal’s modular payment Pay-in-3, and is planning to launch long-term credit for consumers in the next 12 months, although it did not disclose any details of this offer. These credit options will be essential if Dunelm seeks to compete in furniture and across big-ticket items.”
