The homewares retailer with the best value Dunelm Mill has carried strong momentum into 2023, following a blockbuster 2022.
While rival John Lewis was basking in the glow of the Games, Dunelm enjoyed one of the most important moments in its history as it knocked the high street bellwether from leading the household goods market. The data on the share of customers in 2022 revealed Dunelm beat the department store group with a 6.9 percent percentage of the £11bn homewares market, beating John Lewis’ 6.8%.
The business’s growth was evident in its financial results as the family founded business posted a pre-tax profit rise of 15.1 percent to £96.2m in the 52 weeks to June 30, 2022. Like-for-likes were up 3.1% while revenues increased 12.1% to £603.7m as its proposition, which was marketed as ‘Simply value for money is appealing to shoppers who are strapped for cash.
The retailer is a story of rags to riches background. Its founders Bill Adderley and his wife Jean started selling clothes on a market stall in Leicester during 1979. Dunelm established a solid business before it floated in 2006, with a value of £340m.
However, Bill Adderley, who still lives in the eastern Midlands is still simple. In 2010, he said: “I like to watch a bit of telly, play golf and do what you do. I enjoy a takeaway meal and a pint, exactly like you.” Although Bill has quit the company but his son Will who was previously chief executive, has been appointed deputy executive chairman, having handed over the chief executive position to the former Halfords chief financial officer Nick Wharton in February 2021.
Together the Adderleys control nearly 55 percent of the shares. Halfords head of the executive Matt Davies is a non-executive director.
Dunelm’s attitude towards store expansion has been weighed and the estate is now at 123 out-of-town shops and nine high street shops. It covers all of the UK including Cornwall up to Inverness and has five stores in Northern Ireland.
The retailer has substantially increased its product range in its time of existence. Dunelm has interwoven new big-ticket collections with its traditional fabrics that originated by the textile hub of the eastern Midlands.
The larger stores have fabric shops-in-shops and made-to-measure curtains is a crucial service that is supported by a dedicated unit in Leicester.
Dunelm’s range now comprises about twenty thousand lines and includes everything from neon kettles as well as football-themed cushions. As its categories have expanded also has its competition. Dunelm is now fighting it out with homewares rivals of all kinds.
The expanded assortment is an important factor in its financial performance. Despite its price-for-money offering, Dunelm experienced a slowdown in both growth and like-for-likes when the recession intensified from 2018 to 2021, but it saw an upturn in 2019/20, due to new stores and lower like-forlike comparables. Dunelm turned the corner in 2012, however, as an extremely hot and humid summer drove shoppers to its stores.
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Dunelm Mill operating performance
However, profits continued rise through the recession, in an industry that has been defined by the tight control of expenses.
The company has run a tight ship and operating margins and profits rose when it improved efficiency and reduced the costs of refits and store renovations and financing store expansion from cash flow.
Recent improvements to systems have allowed workers to have more time dealing with customers without additional labour cost, therefore improving customer service.
It has also built a multichannel business. This includes a site for transactions that offers the complete range of items, along with web exclusives and a click-and collect service.
This autumn Dunelm released a catalog that was 200 pages. Sales on the internet were reported to be at least PS15m last year.
Retail Week Knowledge Bank notes: “Dunelm is expected to continue outperform the home furnishings sector due to its value-driven strategy, given that the UK economy is forecast to remain weak in 2023.” The future of the retailer is looking bright considering that the economy remains depressed and it will strive to enhance efficiency and gain enduring customer appeal.
