Homeware and soft furnishings retailer Dunelm Group has reported a like-for-like (LFL) sales decline of 4.2 per cent in the second quarter of its financial year, although the company’s management believes the firm is still in a strong position.
In a financial statement covering the 26 weeks to January 1st 2011, the group said that year-on-year LFL sales declined by 1.2 per cent but total sales were up 8.5 per cent to £275.7 million.
The tricky trading conditions before Christmas caused by poor weather and the tough comparisons with last year’s strong sales growth were cited as reasons for the slowdown in H1 trading.
Considering Dunelm’s strong presence in out-of-town retail parks and the general weakening of the UK homewares market, the slip in sales is perhaps better than expected.
Former Group Finance Director of Halfords Nick Wharton is set to take over as CEO of Dunelm in February and he will take control of a company looking to transform its store portfolio in the months ahead.
Having opened seven superstores during the half-year period, the retailer plans to add four new leasehold superstores in H2 and two similar outlets in the following financial year. Additionally, two existing under-sized stores are set to be moved to newly acquired freehold sites in 2011/12.
Will Adderley, current CEO of Dunelm, said: “We have continued to develop our business successfully during the half and we were delighted to celebrate the opening of our 100th superstore at the beginning of December.
“The business is in good health operationally and we remain in a very strong financial position.
“However, trading conditions have been tough in our most recent quarter, especially in our peak trading weeks in late November and early December and this has had an impact, albeit limited, on both revenues and earnings.
“Looking ahead we are facing a number of external factors in our market which could affect both consumer demand and bought-in costs for a period of time.
“We are very confident that we can use our strong financial position and entrepreneurial flexibility to trade our way through this period and build an even stronger business for the long term.”
Adderley is preparing to become Executive Deputy Chairman when Wharton takes over as CEO next month.