Out-of-town homewares retailer Dunelm has reported profit before tax (PBT) of £83.6 million in its full year results published today.
Reporting a nine per cent increase in PBT on last year for the 52 weeks to July 2nd 2011, the retailer also saw revenues rise by 9.3 per cent to £538.5 million, as competitors in the homewares sector continued to struggle amid ongoing economic uncertainty.
There was a like-for-like (LFL) sales decline of 0.6 per cent for the year but the chain has continued to prioritise development despite difficult trading conditions which saw other homewares retailers such as Habitat and Lombok forced into administration earlier this year.
Now operating from 104 stores throughout the UK, the retailer opened ten new outlets during the period and a further nine more are set to open before Christmas.
David Stead, Finance Director for Dunelm, commented: “Operating costs grew by 12.8 per cent compared with last year, with the increase primarily due to investment in the store portfolio and supporting central infrastructure.
“Operating costs in like-for-like stores increased by just 2.1 per cent despite increased investment in multi-channel operations and refits.
“Non-store costs grew in line with the overall growth of the business, including increased marketing investment and enhanced warehousing and distribution capacity.”
The retailer’s commitment to growth in the market comes at a time of high inflation, particularly in materials essential to the homewares sector.
Nick Wharton, CEO, argued today that growth at such a time of uncertainty for the market highlights the strength of the business.
“In the context of a consumer environment which has continued to be challenging, we are satisfied with our trading performance over the last financial year,” he commented.
“The environment across the year was characterised by new levels of uncertainty, both in consumer behaviour and in the rate of commodity price inflation, which in cotton and other man-made alternatives was at a level not experienced for a generation.
“Against this backdrop we have focussed on managing the controllable elements of our business model, with a particular emphasis on operating costs.
“The growth achieved in gross margins and the progress made in the second half year in cost management were particularly pleasing and have led to a 20 basis points expansion in operating margins year on year, after absorbing the costs associated with the expansion of retail space.”
The company also posted positive news for shareholders, as basic EPS rose ten per cent on 2010 to 29.7p, and the outlook for the next financial year is positive as multichannel offerings are set to be developed.
During the year, major investment in the retailer’s website has seen customers spending up to £50 online, approximately twice the level achieved through store transactions.
Wharton feels that these ongoing strategies will continue to provide solid results in the coming year.
“While we anticipate that the consumer environment will remain challenging through the current financial year, we have demonstrated, through disciplined execution of our strategy and close operational management, that our business can make good progress in these conditions,” he added.