LONDON (Alliance News) - Dunelm Group PLC on Thursday said its sales continued to grow in the fourth quarter of its financial year and said it has hired a new chief financial officer from fellow FTSE 250 constituent Go-Ahead Group PLC, the latest in a series of changes made at the top of the homewares retailer.
Dunelm shares up 1.5% to 887.00 pence midday Thursday.
Dunelm said its total sales in the fourth quarter to June 27 were up by 12.1% to GBP200.1 million, helping to push its total sales for the full year, covering the 52 weeks to June 27, up 12.7% to GBP822.7 million. The group now expects its pretax profit for the 52-week comparable period of GBP119 million to GBP123 million, compared to GBP116 million a year earlier.
For its statutory reporting period, covering the 53 weeks to July 4, Dunelm expects to post a pretax profit of GBP121 million to GBP125 million.
Sales were driven higher by solid growth in Dunelm stores but were given a substantial boost by the performance of its home delivery business, where sales rose by 55% over the course of the year, with a 43% rise in the fourth quarter.
Like-for-like in-store sales were up by 3.5% in the fourth quarter, boosted by a strong summer sale performance and continued growth in its Made to Measure curtains and blinds services, along with good trading in its furniture department.
But Dunelm said its gross margin for the fourth quarter decline by around 70 basis points year-on-year, hit by higher-than-normal clearance activity on its excess furniture stock and end-of-season lines. Due to the deterioration in the final quarter, Dunelm expects its gross margin for the full-year to decline by 20 basis points from the 49.5% it posted last year. Excluding the impact of the clearance activity, the group's gross margin for the year remained stable.
The company said its legally-committed new store opportunities pipeline is currently at eight, with two of these expected to open in the first half of its new financial year. The group also said its new web platform went live on July 1.
In addition, Dunelm said it has appointed Keith Down as its new chief financial officer, with plans for him to take on the role in December when his predecessor, David Stead, retires from the board.
Down joins from his role as chief financial officer at transport firm Go-Ahead and, prior to that position, was the chief financial officer of pub chain JD Wetherspoon PLC. Go-Ahead said it has started the process of finding Down's replacement but said he will remain with the company until the end of this year.
His appointment marks another in a series of changes made at the top of Dunelm in recent months. In June, the company said it had hired John Browett, the former chief executive of Dixons Retail PLC, the electronics retailer which merged with Carphone Warehouse PLC to form Dixons Carphone PLC last year, as its new chief executive. He will replace incumbent chief Will Adderley in January but joined the board on July 1 in order to allow for a transition period.
That came after Dunelm moved in April to hire Andy Harrison, the chief executive of Premier Inn and Costa Coffee-owner Whitbread PLC, as its chairman. He is set to leave Whitbread at the end of this year and took over as chairman this week after Geoff Cooper retired.
"We have continued to achieve good like-for-like growth in the final quarter of our financial year, across physical stores as well as our home delivery channel. I would like to thank all colleagues for their efforts in delivering this strong result," said Adderley, Dunelm's outgoing chief executive.
"With a newly strengthened senior team, a recently upgraded website, a sound pipeline of new stores and an ongoing programme of capital and revenue investments in place, I am confident that we will continue to deliver further growth across all our channels going forward," Adderley added.
Cantor analyst Freddie George said Dunelm's sales came in ahead of its expectations, but said the gross margin deterioration in the fourth quarter offset some of the positivity on the figures. George also questioned whether, following the appointment of Browett, another strategy re-think may be on Dunelm's horizon.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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