Dunelm shares jump on cosy sales rise
Homewares chain Dunelm continued to defy forecasts today after it posted a surprise rise in like-for-like sales in the quarter to October 2.
Comfortably done: Last month Dunelm reported 46% rise in pre-tax profits to £76.8m
The Leicester-based firm, which has 106 stores under the Dunelm Mill name, reported growth of 2.1%, beating City expectations that its sales could fall by as much as 5% due to strong comparisons with trading a year earlier.
Dunelm said it was encouraged by the strength of demand in the first quarter but warned that it expected market conditions to remain tough.
Shares jumped 6% or 22.8p to 428p after the chain extended its recent run of market-beating updates.
Last month it reported a 46% rise in pre-tax profits to £76.8m as its position in the value-for-money sector continued to attract shoppers.
Mark Photiades, an analyst at Singer Capital Markets, described today's statement as encouraging and said he expected the City's forecast for profits in the year to July to increase by around 8% to £88m.
He added: 'We continue to believe that Dunelm is an extremely well run retailer with significant expansion potential. That said we are wary of the likely deterioration in the consumer environment in 2011.'
Dunelm opened three new superstores in the quarter, including the relocation of a shop in Hereford, as it pressed on with a plan to build a UK-wide portfolio of 200 outlets.
A further five openings are planned in the current quarter.
It has also extended the range of products sold under the Dorma brand to include bathroom, gift and tableware lines, while it has created an extended furniture department in several of its larger stores.
Chief executive Will Adderley said: 'We remain cautious about the UK consumer environment, but are encouraged by the strength of trading over the first quarter and we are pleased with our pipeline of new store openings.'
Mr Adderley recently announced plans to give up day-to-day running of the firm his parents started from a market stall in 1979.
He will remain on the board of Dunelm to work on specific aspects of the business after his 15-year spell as chief executive helped grow the company's annual revenues to almost £500m.
Mr Adderley will hand over to Halfords finance director Nick Wharton in February.
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