Dunelm hit by tough trading in its stores

City A.M. Reporter
DUNELM said yesterday trading conditions remained challenging through the third quarter, and the British homewares retailer predicted weak gross margin growth for its full fiscal year.

Gross margins increased by 30 basis points compared with the third quarter of the previous year, but the firm said it expected gross margin growth to be 20 basis points for the full year ending June 2012.

“Although we saw strong store performance in January and growth in multi-channel revenues throughout the quarter, these were partially offset by more depressed store footfall patterns in February and March,” the company said in a statement.

Dunelm, which trades from over 110 mostly out-of-town Dunelm Mill stores selling items such as bedding, curtains, kitchenware and lighting, said total sales for its third quarter grew 11 per cent to £154.1m.

Like-for-like sales growth was 0.6 per cent as the homewares market remained under pressure as households tighten belts in the tough economic climate.

The group has nine stores on high streets with the rest in edge of town retail parks, which have generally been performing better.

The company said the total number of new stores opened so far during the year was 15, with its new store pipeline remaining “encouraging.”

Nick Wharton, Dunelm’s chief executive, added: “It is prudent to remain cautious about the wider economy and, recognising its impact on consumer confidence, we will maintain our disciplined approach to the management of gross margin and operating costs.

“However with a clear growth strategy and strong pipeline of new stores ahead we remain confident in the future prospects.”