Dunelm expects price increases to ‘accelerate’ as costs jump
The home furnishings chain is under pressure, along with other retailers, from rocketing freight costs, utility bills and wage inflation.
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Your support makes all the difference.The boss of Dunelm has said the retailer is likely to “accelerate” price increases in the next few months amid surging costs.
The home furnishings chain is under pressure from rocketing freight costs, utilities bills and wage inflation, which is set to rise further from April.
Chief executive Nick Wilkinson told the PA news agency that the company had kept prices flat in previous years but has recently imposed increases and expects more to come.
“Price increases have been a feature of the past 12 months as we’ve seen pressure on costs,” he said.
“That will probably accelerate in the next few months, but we recognise the position of our customers so will continue to provide a wide choice on pricing.
“Some may choose to price down but we have those products available so don’t expect to see a huge impact there.”
The comments came as Dunelm revealed that customers sprucing up their homes during the pandemic helped drive record profits over the past half-year, although it warned that the economic backdrop remains “uncertain”.
It added that trading in 2022 so far has been “encouraging” as it shrugged off the potential impact of the spread of the Omicron variant of coronavirus.
It came as the Leicestershire-based business revealed that pre-tax profits jumped by more than a quarter to £140.8 million for the six months to Christmas Day, compared with the same period last year.
The group said it is therefore on track to meet profit guidance which it increased last month following strong festive sales.
Dunelm stressed that the wider economic outlook “remains uncertain” but added that it is well positioned to navigate inflationary pressures amid soaring costs for retailers.
It said the fact that it sells “largely own-brand product” and has strong supplier links will help shelter it somewhat from major headwinds.
We are moving forwards as a bigger, better business, with more capability, more resilience, more ambition, and delivering accelerated growth
Sales since the start of the year have remained “consistent” with the last six months of 2021, the company added, despite pressure from the spread of Omicron and the cost-of-living crisis.
The firm reported a 10.6% rise in sales to £795.6 million for the last six months of 2021, compared with the same period last year.
Total online sales more than doubled over the period and Dunelm also hailed “very encouraging” store sales as customers returned to physical shops.
Mr Wilkinson said: “When we announced our interim results in 2020, we were weeks away from the world being turned upside down.
“Two years later, we are moving forwards as a bigger, better business, with more capability, more resilience, more ambition, and delivering accelerated growth.
“Together we have navigated another period filled with significant and evolving external challenges and delivered a very strong performance in the first half, with continued growth in customer numbers, further market share gains, record sales and particularly strong profitability.”
Shares in the company moved 2.4% higher to 1,295p in early trading on Wednesday.