Comment: Dunelm celebrates 30 years in style

15th Sep 2009 12:43

Dunelm calls itself the UK's leading specialist out of town homewares retailer, and who would argue with it after today's strong full-year results and impressive start to the new financial year.Pre-tax profit for the 53 weeks to 4 July 2009 jumped 9% to £53.5m and by 6.8% to £52.5m on a comparable 52-week basis. Overall sales rose 8.2% over the year to £423.8m, or by 6.3% for the 52 weeks.Like for like sales recovered from a 5.6% decline during the first half to end the year down just 0.5%. They've continued to improve, surging 16.1% in the first 10 weeks of the financial year to 12 September.Thirty years ago the company was just a market stall in Leicester selling curtains. It opened its first Dunelm superstore in 1991 and now offers everything from bedding, quilts and cushions to bathroom products and kitchenware, from 97 stores across the country, 85 of them out-of-town superstores. It employs over 5,000 people.Founders Bill and Jean Adderley handed over day to day running of the business to son Will 13 years ago, ahead of the company's £340m stock market float in October 1996. It's now worth a record £630m.Chief executive Will thinks it's the company's 'Simply Value For Money' philosophy that appeals to customers, especially in the current economic climate. 'Our business is not significantly reliant on big-ticket purchases - our average basket remains below £30,' he says.Shoppers aren't spending as much as they used to, especially on things for the house, but when they do they're shunning more expensive rivals like John Lewis and Marks & Spencer and heading down the road to Dunelm.It hasn't even had to rely on heavy discounting to attract them. Gross margin for the 12 months rose 120 basis points to 45.8%, and is up 180 basis points year-on-year at the start of the current period. The firm is not resting on its laurels though. It's contractually committed to open nine more stores over the next twelve months and has 'numerous' further opportunities under negotiation. British consumers are likely to have a tough time over the next year or two. But a slow recovery and unemployment near 3 million will keep the focus on cost and should guarantee the continuing popularity of value chains like Dunelm.