Dunelm Shares Drop 6% As FY Sales, Profits Grow

Core Viewpoint - Dunelm Group reported an increase in full-year sales and profits despite a challenging consumer environment, with shares dropping 6% following the announcement [2][8]. Financial Performance - Revenues increased by 3.8% to £1.8 billion for the 12 months ending June 28, attributed to volume increases and a rise in average product prices [2][3]. - Gross margins improved to 52.4% from 51.8%, leading to a 2.7% rise in pre-tax profits to £211 million [5]. - Net debt rose to £102 million from £55.6 million, resulting in a net debt to EBITDA margin of 0.3 times, up from 0.2 times [5][6]. Market Position - Dunelm's market share in the combined homewares and furniture markets increased to 7.9% from 7.7% [3]. - The number of active customers grew by 80 basis points year on year, with digital sales accounting for 40% of total turnover, up from 37% in the previous financial year [4]. Strategic Developments - The company made significant acquisitions, including Home Focus and Designers Guild, marking its entry into the Republic of Ireland and expanding its product offerings [6][8]. - Dunelm opened its 200th store and its first location in inner London, while also expanding its Click & Collect service [8]. Future Outlook - The company expressed satisfaction with early trading in the new financial year but noted the absence of signs indicating a sustained consumer recovery [8]. - Analysts highlighted the importance of Dunelm's online channels and efficient store rollouts, while also cautioning about potential risks due to changing consumer preferences and ongoing cost inflation [9].