Homeware retailer Dunelm (LON:DNLM) saw shares fall nearly 10 percent on Wednesday, after warmer weather and weaker sales caused a sizeable drop in profit.
Dunelm saw pre-tax profit fall 26 percent in the 26 weeks to December 31st, falling to £55.9 million from £75.5 million the year before. The figures were partially offset by a 2.8 percent rise in sales to £460.5 million, but declined on a like-for-like basis by 1.6 percent as “unusually warm weather” slowed footfall.
In a statement, the company drew attention to its increased market share but added that short-term supply chain disruption and softer-than-expected trading led to a weaker set of results than anticipated.
Dunelm gave an update on its acquisition of the Worldstores chain, saying that it would “enhance [their] leading position in homewares and enables acceleration of online and furniture growth”.
John Browett, Chief Executive Officer, said the environment had been “challenging” over the first half of the year, adding:
“We are in a transitional year for Dunelm and it has been a particularly busy first half – whilst we are operating in a challenging retail environment, especially in homewares, we remain focused on investing in and developing our business for the future. We are still in the midst of this exciting journey, and whilst trading was slightly softer than we would have liked due to a weaker market, we continue to increase our share and are confident that we will emerge as an even stronger market leader.
“We remain committed to our long term plans for the business, with our three-part growth strategy at the centre of everything we do. We have opened five new stores in the period and have more openings and refits planned in the second half. Our home delivery channel continues to perform well and our acquisition of Worldstores will accelerate our online capabilities and growth potential.”
Good news for investors came in the form of the company lifting its interim dividend by 8.3 percent to 6.5p per share, reflecting strong cash generation.
Shares in Dunelm Group are currently trading down 8.11 percent at 627.00 (1027GMT).