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How Are Dunelm Mill Performing?

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Homewares store with a value Dunelm Mill has carried strong momentum into 2023, following an epic blockbuster 2022.

While rival John Lewis was basking in the glory from The Games, Dunelm enjoyed one of the most important moments in its history as it knocked the high street bellwether off leading the household goods market. Verdict share data for 2022 has revealed that Dunelm was ahead of the department store group , claiming an 6.9% share of the PS11bn household goods market, beating John Lewis’ 6.8%.

The company’s success was evident financially when the family-owned business reported a pre-tax profit surge of 15.1 percent to PS96.2m during the 52 weeks up to June 30, 2022. Like-for-likes increased by 3.1 percent, while revenue grew 12.1% to PS603.7m according to the company’s proposition that featuring the slogan ‘Simply value appeals to shoppers who are strapped for cash.

The retailer has a rags to riches background. Founders Bill Adderley and his wife Jean started by selling fabrics at a market stall in Leicester in 1979. Dunelm was then able to build an enterprise on solid foundations before it floated in 2006, estimated at PS340m.

But Bill Adderley, who still lives in the east Midlands, remains grounded. He said in 2010: “I like to watch the news and play golf. I also enjoy the same things that you would do. I am a fan of takeaway food and a pint, exactly like you.” Although Bill has retired from the company but his son Will who was previously chief executive, has been appointed deputy executive chairman, having handed over the position of chief executive to former Halfords Group Finance Director Nick Wharton in February 2021.

Together the Adderleys control nearly 55% of the shares while Halfords chief executive Matt Davies is a non-executive director.

Dunelm’s attitude to store expansion has been assessed and the current estate stands at 123 out-of-town stores and nine high street stores. The estate covers a wide area across the UK across the country, from Cornwall all the way to Inverness and five stores situated in Northern Ireland.

The retailer has vastly broadened its offerings in its time of existence. Dunelm has interwoven new big-ticket lines with its core textile products that were born by the textile hub of the eastern Midlands.

Its larger stores feature fabric shop-in-shops while made-to-measure curtains are a major service offered with a specific facility in Leicester.

Dunelm’s collection now includes around 20.000 lines that cover everything from neon kettles to football-shaped cushions. As its categories have expanded, so has its competition. Dunelm is now fighting out with homewares rivals of all sorts.

The expanded assortment is an important element in its financial performance. Despite its money-saving offer, Dunelm experienced a slowdown in growth and like-for-likes as the recession got worse from 2018 to 2021, however, it was buoyed by an improvement in the year 2019-20, thanks to the opening of new stores and low like-for-like comparisons. The retailer turned a corner in 2012 however, when an unseasonably hot and wet summer led shoppers to its shops.

Dunelm Mill operating performance

However, profits continued increase throughout the recession in a business that has always been typified by close control of costs.

The retailer has been operating a tight ship and profit margins and operating margins have increased as it gained efficiencies which reduced the expense of refits and store renovations and financing expansion plans with cash flow.

Recent improvements to systems have allowed personnel to devote more of their time dealing with customers, with no additional costs for labor, thus improving customer service.

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It has also built a multichannel business. This includes a transactional site that offers the complete selection of services, including web exclusives and a click-and collect service.

This autumn Dunelm launched a brand new catalog of 200 pages. Online sales were reported to be around PS15m in the year before.
Retail Week Knowledge Bank notes: “Dunelm is expected to continue outperform the home furnishings sector due to its value-driven strategy, given its forecast that UK economy is expected to remain weak in the year 2023.” The retailer’s future is bright, even as the economy remains depressed and it will be looking to increase efficiency and retain its long-lasting consumer appeal.