Wilkinson promises greater focus as profits fall
Dunelm had a ‘difficult and disappointing’ year as it suffered from a ‘weaker grip’ on retail basics as management focused on online integration, according to Nick Wilkinson, Dunelm ceo.
Pre-tax and exceptional items profits fell by 6.7% to £102m as it continued to integrate Worldstores, which lost £8.4m.
Sales rose by 9.9% to £1.05bn, with like for like sales rising by 4.2%, thanks largely to higher online sales as in-store sales rose by 1%.
Opening a net nine new stores increased sales space by 6.1%.
‘We have seen profits fall in our last two financial years and we have identified a number of issues and opportunities to improve performance of the core Dunelm business. We need to evolve to a market-leading multichannel offer. The actions to capitalise on the assets acquired with Worldstores are the critical next phase on this journey,’ Wilkinson said.
‘We also have a clear opportunity to improve our customer offer via renewed focus on our value for money credentials. We will reinvigorate our programme of special buys in the coming months and ensure these are prominently displayed in stores and online.
‘We have grown our furniture business over recent years such that furniture, excluding Worldstores, now represents approximately 5% of Dunelm sales, but the proposition is still at an early stage of development. I am excited by the opportunity to develop our furniture offer further across all channels.
‘Over the last year we have made conscious decisions to invest in areas such as digital marketing and technology, and these investments will continue. We have partially offset these investments through productivity initiatives, both in stores and in our supply chain operations, including elimination of some of the Worldstores operating costs. However, we have also suffered increased operating costs due to weaker grip on basics such as stock loss, sourcing and procurement. We are now refocused on improving controls in these areas.
‘In the near term, we have a number of self-help opportunities to improve profitability and cash generation after a difficult and disappointing FY18. The UK retail environment remains challenging, but against this difficult background we have traded in line with expectations during the current financial year to date.’