Homeware retailer Dunelm has warned that first-half profits are likely to decline after sales were hit during the summer heatwaves.
The group reported that total sales fell by approximately 3% in the first six weeks of its new financial year, which it attributed to "exceptionally warm weather", compounding an already challenging trading environment and a fragile consumer spending backdrop.
Post-summer rebound
However, Dunelm highlighted a stronger performance over the subsequent seven weeks to 26 September, with total sales bouncing back to record roughly 4% growth, leaving total sales up 1.1% across the quarter. On a like-for-like basis, sales slipped 0.8%.
The retailer warned that underlying pre-tax profits are expected to fall short of last year's figures, yet it left its full-year guidance intact, placing its confidence in recovery plans designed to bolster trading during its peak season and second half.
CEO comments on momentum
Clo Moriarty, chief executive of Dunelm, said: "I'm encouraged by the momentum we built as the quarter progressed, following the impact of the exceptionally warm weather."
"We're taking clear actions to build a stronger customer proposition and create the capabilities needed to support our long-term growth. The early signs are encouraging and reinforce our confidence in the opportunity ahead."
Cost-cutting strategy
Last month, Dunelm unveiled plans to strip out around £100 million of "unproductive" costs from the business as part of a new three-year growth strategy, having already reduced its central teams by approximately 8%. The cost-reduction initiative aims to deliver savings by the 2029 financial year through a combination of restructuring and overhauling internal processes.
Dunelm confirmed at the time that it had already cut around 8% of "central roles" – equating to some 95 redundancies across support functions and distribution – to "simplify the business and reduce central costs" as part of the shake-up.
The three-year strategy also encompasses plans to streamline and enhance the retailer's product ranges, revamp its existing store network and open new outlets. Dunelm revealed it had identified around 100 potential sites for new stores, with up to 10 new openings annually over the next three years, which is expected to generate new employment opportunities.
In its most recent update, Dunelm stated that the cost savings generated through the programme will "create capacity to invest in future growth opportunities, including establishing a dedicated change team and strengthening the use of data and analytics across the business".
