Evening Telegraph

Dunelm reveals second year of falling profits

Retailer Dunelm has blamed management upheaval, a hit from a recent acquisition and difficult trading conditions for its second year in a row of falling profits.

The home furnishing group posted a 6.7% fall in underlying pre-tax profits to £102 million for the year to June 30.

Its figures were knocked by an £8.4 million hit from the Worldstores takeover, which it completed in November 2016.

Chairman Andy Harrison admitted the group had let “some of our basic retail disciplines” slip due to management changes and the “distraction” of its Worldstores acquisition.

Like-for-like sales rose 4.2%, with stores seeing growth of 1% and online up 37.9%.

Mr Harrison said: “The year under review was complicated by a combination of management changes, the integration of Worldstores and a fragile economic environment.

“However, the appointment of our new chief executive, Nick Wilkinson, in February brought cohesion and impetus to our strategic thinking and as a board we are pleased with the immediate progress he has achieved.”

Shares lifted 3% after the figures. On a reported basis, pre-tax profits rose 0.8% to £93.1 million.

The group has seen shares come under pressure after a series of profit warnings since spring, with falling consumer confidence and challenging trading adding to its woes.

It also endured a shake-up at the top, with Mr Harrison forced to step in last year after former chief executive John Browett stepped down at the end of August for “personal reasons” after a brief stint in charge.

Recently-appointed boss Mr Wilkinson, who started in February, said the group was acting to shore up profits and boost sales with a further push online, including a new IT system for Dunelm.com.

He said: “Following healthy sales growth over the past year, we are now taking steps to simplify the business under the core Dunelm brand, with one web platform and an integrated supply chain. This will allow us to respond more quickly to the changing consumer environment and drive future profitable growth.”

He added trading conditions remained “difficult” but said the group was trading in line with its expectations in the new financial year so far.

Neil Wilson, chief market analyst for Markets.com, said Dunelm was battling against a number of headwinds, including a stalling housing market.

“UK retail market remains tough, especially physical stores, whilst the softer property market undoubtedly means people are updating soft furnishings less often,” he said.