Dunelm has used the challenges of the pandemic and closed stores to successfully boost its digital related sales.
Dunelm success digitally
Online sales are up by 38% compared to the comparative quarter this time last year. Click & Collect sales now account for approximately one-quarter of its total digital sales, with further investment across its digital offering set to be made.
Expected profit for the full year has again been raised, helped by stronger than expected sales since the reopening of its stores following pandemic lockdowns.
A buoyant housing market and more time spent at home due to the Covid crisis are likely playing into its hands. Demand for bedding, curtains, bathroom textiles and cushions, and newer categories such as dining furniture has proved strong.
For investors, a more than doubling in the share price since pandemic market lows in March 2020 has already priced in much of the good news. An estimated price/earnings ratio above the 10-year average also suggests the shares not obviously cheap. And, like other retailers, Dunelm continues to suffer disruption within its global supply chain.
But its greatly increased digital related sales boosts confidence that it can successfully compete going forward. A forecast dividend yield in the region of 2.2% is not to be dismissed in the current ultra-low interest rate environment. And its previously detailed 'make & mend' initiative is possibly a nod to wider environmental concerns. In all, with digital sales growing and plans still in place to expand its store portfolio further, market consensus opinion currently points to a buy.
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These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.