Profit before tax dropped by 11.3% at Dunelm Mill during the 26 weeks to December 31, 2016, despite a 2.8% upturn in sales – boosted, in part, by the retailer's acquisition of Worldstores.
Sales stood at £460.5m for the half, revised to £452.4m when excluding Worldstores. Revenue dropped 1.6% like-for-like for the sales period.
Profit before tax and exceptionals was down 11.3%, with EPS (fully diluted) down 10.6% and free cash flow down 65.5%. Bosses described trading as “softer than expected” due to “a weaker market and some short term supply chain disruption.”
Five new stores were opened during the trading period, with a further five forecast for the remainder of the financial year. Said chief executive officer John Browett, “We are in a transitional year for Dunelm and it has been a particularly busy first half - whilst we are operating in a challenging retail environment, especially in homewares, we remain focused on investing in and developing our business for the future.
“We are still in the midst of this exciting journey, and whilst trading was slightly softer than we would have liked due to a weaker market, we continue to increase our share and are confident that we will emerge as an even stronger market leader.
"We remain committed to our long term plans for the business, with our three-part growth strategy at the centre of everything we do. We have opened five new stores in the period and have more openings and refits planned in the second half. Our home delivery channel continues to perform well and our acquisition of Worldstores will accelerate our online capabilities and growth potential.
"We have significant opportunities to improve performance through various initiatives and will continue to invest. Dunelm's business model remains one that is hard to replicate, and we continue to generate significant levels of cash for shareholders, allowing a further increase in the dividend."