Value homewares retailer Dunelm Mill has carried strong momentum into 2023 after the blockbuster film 2022.
While its rival John Lewis was basking in the glow that was the Games, Dunelm enjoyed one of the biggest events in its history, when it knocked the high street bellwether from to the forefront of the market for homewares. Verdict share data for 2022 revealed Dunelm outstripped the department store chain to take the 6.9 percent share of the PS11bn homewares market, beating John Lewis’ 6.8%.
The business’s growth was evident in its financial results as the family founded business saw a profit increase before tax of 15.1% to PS96.2m during the 52-week period up to June 30 2022. Like-for likes were up 3.1 percent, while revenue grew 12.1% to PS603.7m according to the company’s proposition that straplined ‘Simply value for money’, appealed to cash-strapped shoppers.
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The company has a rags to riches story. Founders Bill Adderley and his wife Jean started selling clothes on a market stall in Leicester in 1979. Dunelm later built its business on solid foundations before launching in 2006 and valued at PS340m.
But Bill Adderley, who still lives in the eastern Midlands, remains grounded. In 2010, he said: “I like to watch the news and play golf. I also enjoy the sort of things you would do. I like a takeaway and a pint just like you.” While Bill has retired from the business but his son Will who was chief executive, is deputy executive chairman after transferring the chief executive role to former Halfords chief financial officer Nick Wharton in February 2021.
Together, the Adderleys control almost 55% of the shares while Halfords chief executive Matt Davies is a non-executive director.
Dunelm’s stance on store expansion has been assessed and the property now stands at 123 stores outside of town and nine high-street stores. It covers all of the UK all the way from Cornwall up to Inverness and five stores within Northern Ireland.
The retailer has expanded its range during its time of existence. Dunelm has interwoven new big-ticket products with its existing fabrics that originated from the textile hub of the east Midlands.
The stores with the largest sizes offer curtain shop-in shops, and custom-made curtains is a crucial service and is supported by a dedicated facility located in Leicester.
Dunelm’s product range is now comprised of around twenty thousand lines and includes everything from neon-colored kettles to football-shaped cushions. Since its categories have widened also has its competition. Dunelm is currently fighting it out with homewares rivals of all sorts.
Its extensive range of products is a key factor in its financial performance. Despite its value-for-money offer, Dunelm experienced a slowdown in sales and like-for likes as the recession intensified from 2018 to 2021, however, it was buoyed by an upswing in 2019/20 driven by new stores and weak like-for-like comparatives. The retailer saw a turnaround in 2012 when the summer heat and humidity drove shoppers to its stores.
Dunelm Mill operating performance
However, profits continued increase throughout the recession in the business sector that has always been marked by strict control of expenses.
The company has run with a steady pace and operating margins and profits grew as it gained efficiencies, cutting the cost of refits and store renovations and financing store expansion with cash flow.
Recent improvements to systems have enabled staff to spend more time dealing with customers, with no additional costs for labor, thus improving customer service.
It has also built an operation with multiple channels. It includes a transactional website that provides the full range as well as web exclusives, as well as a click-and-collect service.
This autumn Dunelm released a catalog of 200 pages. Sales on the internet were reported to be in the region of PS15m last year.
Retail Week Knowledge Bank notes: “Dunelm is expected to continue to outperform the furniture industry as a result of its value-driven stance, taking into account that the UK economy is expected to remain weak in 2023.” The future of the retailer is bright, even as the economy is in decline and it will strive to enhance efficiency and retain its long-lasting consumer appeal.