Dunelm predicted to post higher profits after shift in strategy

Investors will be hoping for a sunny outlook from home retailer Dunelm next week as it reports full-year numbers on Wednesday.

Annual pre-tax profits are expected to be at the higher end of a previously guided £124 million to £126m range, after the group benefited from a spate of favourable weather in the fourth quarter.

Last year the group posted a profit of £93.1m before tax, declining compared to performance in 2017.

As the company returns to profit growth, investors will be hoping for a small bump to the dividend from 28.6p to around 29.7p.

In the year to date Dunelm’s shares have surged by more than 68%, making it one of the bestperforming stocks in the retail sector behind Pets At Home.

Under chief executive Nick Wilkinson, who joined in 2017, the group has shifted strategy to focus on its core offering.

This included closing the underperforming Worldstores and Kiddicare websites to centre efforts on its own online operations.

The roll-out of a new digital platform is under way, with the full transfer expected to complete in the 2020 financial year after a series of beta phases.

Following a July trading update, analysts at Stifel said: “Dunelm continues to gain market share in a highly competitive market, reporting strong volume-driven strong growth across all categories and margin improvements.

“Management changes have enhanced the group’s credentials and we see the recent success as the starting point for further momentum.”

Investors will be keeping an eye out for indications of the group’s near-term prospects.

Russ Mould, investment director at AJ Bell, said it would be “interesting to see if Mr Wilkinson gives any indication of trading trends in the first quarter and any guidance for profits for the new financial year”.