Dunelm hit by tough run-up to Christmas
Published 12/01/2011 | 08:00
Homeware chain Dunelm revealed a tough run-up to Christmas as it gave a jolt to investors used to its recent run of forecast-busting results.
Leicester-based Dunelm, which has 110 stores under the Dunelm Mill name including four in Northern Ireland, said like-for-like sales fell 1.2% in the 26 weeks to January 1 after dropping by 4.2% in the final 13 weeks of the key trading period.
Chief executive Will Adderley said the peak trading weeks in late November and early December were difficult and that conditions were likely to remain challenging over the remainder of the financial year.
The company did not reveal the impact of snow on trading but analysts said between 2% and 3% of sales were lost as shoppers struggled to reach the chain's predominately out-of-town store locations.
Shares fell more than 5% as Dunelm ended its recent habit of delivering market-beating sales figures.
Mr Adderley added: "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.
"However, 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."
As well as the impact of the recent VAT increase, Dunelm said the recent surge in cotton prices was expected to feed through to increased cost of goods by the middle of the calendar year.
Superstores were opened in seven locations during the half year, taking the overall total to 100, compared with the group's medium-term target of between 150 and 200 superstores across the UK.
Mr Adderley recently announced plans to give up day-to-day running of the firm his parents started from a market stall in 1979.
He will remain on the board of Dunelm to work on specific aspects of the business after his 15-year spell as chief executive helped grow the company's annual revenues to almost £500m. Halfords finance director Nick Wharton takes over on February 17.