Dunelm and DFS given a boost as Brits spruce up homes
Still loving the DIY! Britons’ desire to spruce up their homes gives Dunelm and DFS a boost – but Topps Tiles gets the jitters over profit margins
Dunelm enjoyed record Christmas sales levels and is on track for bumper profitDFS, known for its sales, said it had enjoyed a strong start to 2022Topps Tiles sees sales increase but expects profit margins to weaken
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Dunelm enjoyed record sales levels over the Christmas period and is on track to beat previous profit forecasts.
The group, which has 176 shops and an online store, reported sales of £407million for the 13 weeks to 25 December, up 13 per cent on a year earlier and up 26 per cent on the same period before the pandemic in 2019.
It said it had seen ‘particularly encouraging growth from its stores’, while higher full-price sales of seasonal ranges helped boost margins by 160 points in the quarter.
Upbeat: Dunelm enjoyed record Christmas sales levels and is on track to beat previous profit forecasts
Dunelm’s boss Nick Wilkinson, said: ‘Whilst there are several macro uncertainties to be navigated, we feel well placed to continue to deliver profitable growth across all channels and grow market share.’
Dunelm added that as long as there was no significant new Covid-19 related disruption it expected its annual pre-tax profit to be materially ahead of market expectations.
Its shares were trading up 5 per cent in morning deals, as broker Peel Hunt upgraded its full-year pre-tax profit forecast by £27million to £206.1million.
Just before 4.30pm, the group share price was up 4.48 per cent or 61.00p to 1,401.00p.
Dunelm was a ‘business on form,’ the broker said, with a proposition that was continuing to resonate strongly with customers.
Before the update, analysts were forecasting Dunelm’s pre-tax profit to come in at around £181million on average.
Strong start: DFS, well known for its sales, said it has enjoyed a strong start to 2022
Furniture retailer DFS has also posted an upbeat update today.
The group, known for its promotional and sales activity, reported a ‘strong order intake performance’ across its first half, adding that the post-Christmas sales period had got off to a strong start.
DFS gross sales were up 10 per cent on the 2019 pre-pandemic comparator for the 26 weeks ending 26 December.
It said that based on ‘reasonable delivery assumptions’ in the second half, its scenarios for full-year profit before tax and amortisation remained unchanged.
The company’s order book was described as strong going into the second half, and was still about £200million higher than pre-pandemic levels on a revenue basis.
DFS boss Tim Stacey said: ‘While the market remains hard to predict, we believe our scale, brand strength and integrated retail strategy will allow us to drive market share gains ahead of the competition.
‘Looking ahead we will continue to invest in our digital platforms and our showrooms, our delivery network, our UK manufacturing capacity, and with expansion into other home categories, we are well positioned to succeed.’
The group’s share price was up over 6 per cent to 258.50p just before 11.30am.
Jitters: Topps Tiles expects its gross margins to come in slightly lower than a year ago
Building materials distributor and DIY retailer Grafton upped its 2021 operating profit forecast today, marking the second times in two months it has done so.
Grafton, which has seen its share price rise today, has been able to make the most of ongoing price rises across its products, and an easing of supply chain pressures as the year came to an close.
The owner of the Woodies DIY retail brand in Ireland said in a trading update that it now expects to post an operating profit of £276.3million, up from predictions coming in at around £265million to £270million.
The group said: ‘The positive revenue growth trends reported for the four months to the end of October continued through to the year-end, driven by the group’s strong brands and market positions against the backdrop of generally favourable trading conditions.
‘While supply chain pressures moderated, building materials price inflation continued to be a key component of revenue growth in the distribution businesses particularly in the UK and Ireland.’
Meanwhile, Topps Tiles today revealed it expects annual gross margins to be ‘moderately lower’ compared with last year, amid surging shipping and input costs.
Chief executive Rob Parker said: ‘Global supply chain challenges, higher staff absence due to Covid-19, and material cost price inflation continue to provide significant headwinds.’
The company, which focuses on renovation, maintenance and improvement of homes, also said it had passed on the higher costs to consumers, but selling prices would increase by a lower percentage than cost prices.
Topps Tiles’ retail like-for-like sales for the 13 weeks ending 1 January 2022 rose 1 per cent, compared with a 20 per cent hike the previous year.
The group added that it was holding higher levels of inventory than it has done in the past in order to alleviate supply chain challenges.
Shares in Topps Tiles fell today, and were down 2.98 per cent or 1.91p to 62.09p just before 11.30am.
