Interactive Investor

ii view: Dunelm posts record profits and pays special dividend

Market share gains have helped fuel growth at this FTSE 250 retailer. We assess prospects.

9th February 2022 15:04

Keith Bowman from interactive investor

Market share gains have helped fuel growth at this FTSE 250 retailer. We assess prospects.

First-half results to 25 December

  • Total sales up 10.6% to £795.6 million
  • Pre-tax profit down 25% to £140.8 million
  • Net cash of £47.7 million, down from £140.6 million
  • Interim dividend up 16.7% to 14p per share
  • Special dividend of 37p per share 

Chief executive Nick 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.

"We look to the future excited, energised and eager to continue being our customers' 1st choice for home."

ii round-up:

Home furnishing chain Dunelm (LSE:DNLM) today posted record first-half profit along with a second special dividend payment in just six months.

Record interim sales helped pre-tax profit rise by a quarter to a previously guided £140.8 million, with a special dividend of 37p per share accompanied by a 16.7% increase in the ordinary dividend to 14p per share. 

Dunelm shares rose by more than 2% in UK trading, having almost doubled since pandemic market lows in March 2020. Shares for clothing and homewares retailer Next (LSE:NXT) have just about doubled in that time, while DIY retailer Kingfisher (LSE:KGF) has risen by around 120%. The FTSE All Share index is up just over 55%.

Dunelm, which sells items from cushions to furniture from over 170 stores along with an online offering, said trading during the second half to date, and including its Winter Sale, had continued to be encouraging. However, management left its full-year 2022 profit estimate unchanged following its recently upgraded forecast to around £206 million. That compares to a 2021 pre-tax profit total of £157.8 million. 

Management pointed to continued outperformance of the market in both homewares and furniture, with active customers reaching 13 million, a 6.3% increase over the last 12 months. Digital sales fell marginally year-over-year to a third of all sales, as pandemic related store disruption eased.   

A third-quarter trading update is scheduled for 14 April. 

ii view:

Dunelm was founded in 1979 as a market stall business, selling ready-made curtains. Today it employs over 11,000 people and sells around 50,000 product lines. Most of its stores are located out-of-town. It became a multi-channel retailer in 2005, launching its own website.

For investors, cautionary comments regarding the uncertain macro outlook should not be ignored. Cost pressures for industry generally remain, while elevated inflation and a cost-of-living crisis for consumers could eventually crimp spending.  

More favourably, sales momentum remains and confidence in the outlook has seen Dunelm declare another special dividend, as it returns borrowings to their previous appropriate level. Room for further market share gains persists, with management estimating that 85% of its growth over the last five years has come this way. In all, with shareholder returns a big focus and the consensus analyst estimate of fair value per share sat at over £15, room for long-term optimism persists. 


  • Achieving record profit
  • Net cash held


  • Supply chain challenges
  • Cautious economic outlook comments

The average rating of stock market analysts:


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