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Dunelm focuses on the customer as it targets £2bn in sales, with up to 40% online

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Dunelm says it is growing the scale and capacity of its online business, selling more products, including furniture as it targets fast growth. The homewares business, a Leading trader in IRUK Top500 research, aims to double its annual sales to £2bn in the medium term, including 30% to 40% from online sales. “We shall achieve this,” said Dunelm in half-year results today, “by making our business twice as good for customers as it is today.”

Online sales grew by more than a third (36.8%) on a like-for-like basis in the first six months of its financial year. Some 18.5% of retail sales took place over the internet by the end of its half-year, December 30. That’s up from 11.7% a year ago. Now its focus is on a seamless customer journey that enables customer to switch easily between channels, whether ordering online and collecting in store, or ordering in store for home delivery.

New improvements to its digital capabilities include the roll out of a trial of tablet-based selling, and plans to fully integrate its websites. It has launched e-receipts in stores, and now aims to fully personalise emails to target customers with relevant offers.

Total revenues of £545.4m in the half-year were 18.4% up on the same time last year, while pre-tax profits of £56.3m, after one-off costs, were 0.7% ahead of last time. Before one off costs, they came in at £60m, down by 8% on last time.

The company says its growth in a “broadly static homewares market” has come thanks to the strength of its customer proposition that helped like-for-like sales to grow by 6% in the first half. Now it plans to focus on IT systems, supply chain and new stores as it invests “in building a stronger business”.

The growth of online comes as Dunelm integrates the Worldstores business, which includes online nursery retailer Kiddicare , that it bought in 2016, immediately doubling the size of its internet business.

Andy Harrison, chairman, said: “The strength of our customer proposition has helped us to deliver a good sales performance in the first half, with like-for-like sales growth of 6.0% and total sales growth of 18.4%, boosted by the Worldstores acquisition. We have made good strategic progress, best highlighted by the 36.8% like-for-like growth in our online sales (including reserve and collect), which now account for 18.5% of our total sales, up from 11.7% last year.

“Our gross margin in the first half was lower due to the mix effect of acquired Worldstores sales and a higher proportion of end of season and seasonal products. We expect a more stable margin performance in the second half, which, together with reduced losses and increased integration benefits from the acquisition, should deliver good full year profit growth.”

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