Dunelm sales drop as customers abandon stores to buy online

Homewares retailer Dunelm has warned its annual profits will be lower than expected after an exodus of shoppers from its stores to online dragged down sales in the last quarter of its financial year.
The FTSE 250 company said it had endured “disappointing footfall” in the 13 weeks to June 30, resulting in a 4.6pc sales slump in stores open more than one year.
That left it holding a larger amount of stock from its summer sale than previously expected, forcing it to set aside ?3m to cover extra losses.
Having warned in May that it expected full-year profits to be “moderately lower” than last year’s ?109m, the retailer said today it anticipated the figure would come in at around ?102m, below City expectations of ?106m.  
Nick Wilkinson, who replaced ousted former Monsoon boss John Browett as Dunelm’s chief executive earlier this year, struck an upbeat tone however, insisting “there is very significant potential for growth of the Dunelm brand”.
Dunelm sales drop as customers abandon stores to buy online

Nick Wilkinson took charge of Dunelm earlier this year 
Sales through Dunelm’s website were much stronger, up 42pc to ?30m, but the group was still left nursing a 1.4pc overall drop to ?236.5m.
The fall was exacerbated by the poor performance of Worldstores, the online rival it acquired for ?8.5m in 2016, where sales fell by more than half to ?10m. 
Dunelm bought the group, which included online stores Kiddicare and Achica as well as Worldstores’ own-branded website, in the hope of boosting its online presence amid growing competition from the likes of Amazon and Argos, which has invested heavily in ecommerce in recent years.  
Markets Hub - Dunelm Group PLC
But the lower-margin businesses have weighed on its group profitability in the months since. The sales drop was partly due to the disposal of Achica, which sells similar products to Dunelm via time-limited “flash sales”, earlier in the year.
Dunelm also plans to shut down children’s products-seller Kiddicare in the first quarter of 2019 but will continue to sell similar lines in its own stores. 
Mark Photiades, an analyst at Cantor Fitzgerald, said: “Whilst today’s trading update is a further disappointment and the Worldstores integration has taken longer than originally hoped, we do believe that in the long run the group will benefit from the acquisition.”
Dunelm's shares were down 0.3pc at 483p in afternoon trade. 
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