Dunelm displays resilience in face of cost-of-living crisis, says GlobalData – Retail Times



Following today’s release of Dunelm’s figures for Q4 FY2021/22; Matt Walton, senior retail analyst at GlobalData, a leading data and analytics company, offers his view: “Dunelm has followed its sparkling Q3 results with a resilient set of Q4 figures to cap a successful FY2021/22 for the homewares market leader, with both its revenue (£1,552.2m) and profit before tax ahead of analyst expectations. Sales did decline by 6.0% in Q4 as the cost-of-living crisis started to clamp down on consumer spend, though revenue remained broadly in line with the elevated levels seen throughout its FY2021/22 as consideration for Dunelm among homewares shoppers increased. GlobalData’s quarterly home tracker shows that in the first three quarters of its FY2021/22, the percentage of shoppers which considered Dunelm for homewares grew by an average of 1.5 ppts on last year. Conversion also improved on last year as its competitive price points and deep ranges resonated with shoppers.

“Gross margin was lower in Q4 falling by 3.2 ppts, contributing to a full year decline of 0.4 ppts, though this was mainly due to the return of Dunelm’s summer sale which was delayed until after its FY2020/21 ended. This full year decline is resilient considering the higher cost of freight and raw materials since the start of the year, with the retailer also working with suppliers to help mitigate future cost increases. Its wide price architecture, including its more premium offer, does provide it with the opportunity to pass on higher costs to customers that are more able to afford it while remaining price competitive for constrained shoppers.

“Dunelm has continued to develop its proposition during the quarter through launching two new stores and reformatting another two, and developing its online offer and product range, with a particular focus on window dressings and lighting. The greater design focus on its new window dressings range will help it resonate with more affluent shoppers and appeal to those wanting a new look which is the main purchase motivator for window dressing shoppers. However, the prospects for the window dressings market will be challenging for the rest of the year given the relatively high price points and non-essential nature of window dressings.

“Though Dunelm has reported that trading so far in July has been solid, the remainder of 2022 will be challenging for the homewares market as UK inflation continues to ratchet upwards and is set to reach a double-digit peak in Q4, when the higher price of utilities will be more keenly felt by customers. Dunelm will not emerge unscathed from these challenging trading conditions, but it has positioned itself well to be less impacted than others. Dunelm’s broad price architecture means customers can trade down within Dunelm rather than go elsewhere. Its premium offer, which includes brands such as Fogarty and Dorma, will also help it appeal to affluent shoppers that may trade down from the department stores and enable it to potentially trade existing customers up, which will help set it apart from the discounters.”


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Following today’s release of Dunelm’s figures for Q4 FY2021/22; Matt Walton, senior retail analyst at GlobalData, a leading data and analytics company, offers his view: “Dunelm has followed its sparkling Q3 results with a resilient set of Q4 figures to cap a successful FY2021/22 for the homewares market leader, with both its revenue…