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Furnishings chain Dunelm has said it will make better profits than expected after improvements to its website boosted sales.
Shares in the company soared nearly 20% on Thursday to 993.5p, the highest level in three years, after Dunelm’s unscheduled stock market statement said that profit margins had also improved because it had secured better deals with suppliers and sold more stock.
“The board now anticipates that the full year profit before tax will be higher than our previous expectations, assuming no significant change in consumer demand as a result of the outcome of the general election,” the statement said.
Analysts said they had now pencilled in annual profits for Dunelm of about £139m, at least 5% more than previously estimated.
Eleonora Dani, at Stifel, said she expected sales and profits to be driven higher by the group’s faster and more personalised website, particularly for mobile phones, and by a click-and-collect service in stores.
She said: “Dunelm’s market-leading position is highlighted by resilient trading across all categories, including furniture, despite many promotional activities [by its rivals].”
John Stevenson, at Peel Hunt, said Dunelm was outperforming its peers as its brand became more well-known and it improved its product range.
Dunelm’s established stores are thought to have experienced a 2% increase in sales, despite a tough market in which other homeware retailers have been struggling.
The slowdown in the housing market and low consumer confidence amid political and economic uncertainty has held back spending on expensive items such as furniture, kitchen appliances and carpets.
Carpetright recently agreed a cut-price £15m sale to its biggest shareholder after it made a pre-tax loss of nearly £25m in the year to April. The sale came after the retailer closed more than 90 showrooms last year in a rescue restructure as it fights off competition from loss-making rival Tapi.
Meanwhile, the loss-making furnishings chains Harveys and Bensons for Beds were sold off by their troubled South African parent company Steinhoff last month.
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