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Dunelm on the value of click and collect; Halfords on online growth and store closures; and Card Factory on strong online growth - but falling in-store sales

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Image courtesy of Dunelm
Image courtesy of Dunelm
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Dunelm on the value of click and collect; Halfords on online growth and store closures; and Card Factory on strong online growth - but falling in-store sales

Dunelm today shows how click and collect and home delivery have helped it make up lost ground while stores are shut during Covid-19 lockdowns. The retailer says its home delivery business has doubled in size since last year, while click and collect has enabled it to replace 30% of sales lost through store closures.

 

The retailer says shoppers are still keen to buy its homewares – through whatever channel they can buy them. Today it reported second-quarter sales of £360.4m – in the 13 weeks to December 26 – 11.8% ahead of the same time last year, despite a November lockdown that left most of its stores closed for up to four of those weeks. Some 40% of sales were digital – delivered either through home delivery or click and collect, and including in-store digital orders – up from 21% a year earlier.

 

First-half sales of £719.4m were 23% up on the previous year, and 35% were digital sales – up from 20% a year earlier. Dunelm now expects pre-tax profits for the first half of its year to come in at about £112m, including the repayment of £14.5m in furlough money to the government. It has now introduced an internal scheme to fund those who are not working during the ongoing closures.

 

Dunelm chief executive Nick Wilkinson says: “We enter 2021 with further restrictions and our primary focus remains the health and wellbeing of our colleagues and customers across the business. Beyond this near term uncertainty, we’ve never felt more confident about the future. Our scalable proposition combines an in-store and digital offer which, with agile technology, we will continue to develop at pace. As our homes play an increasingly important role for all of us, we are well placed to build even closer relationships with our customers and extend our market leadership.”

 

How Dunelm has flexed its sales channels during lockdown

When its stores and online channels have all been open, Dunelm says has performed ahead of the market. But shoppers are also keen to buy online. Its home delivery business has more than doubled compared to the same time last year, while click and collect sales equate to 30% of the sales it made a year earlier.

 

The retailer says it has added extra capacity to its supply chain in response to increasing demand for home delivery. Its inbound supply chain was affected by port delays and shortages of containers during the second quarter but says that typical delays are now only two to three weeks. It now expects to rebuild stock levels – which are currently slightly below last year – during the second half of its financial year.

 

Over the quarter, Dunelm introduced new technology releases for product information management, while reengineering its checkout and improving delivery promises. These, says the retailer, worked well during the peak trading period and “will allow us to continue to innovate our proposition at pace”.

 

At the moment, all of Dunelm’s 174 shops are closed to customers. All but five can operate a contactless click and collect service, while home delivery is continuing as normal. As long as those services can continue to operate, the group says it will make a “modest weekly loss” given its fixed costs, but it expects a return to more normal trading in the fourth quarter. In Scotland, non-essential click and collect has been stopped as Covid-19 restrictions have tightened, and John Lewis has also taken the decision to suspend its service.

 

Halfords sees rise in online sales - and plans 47 more store and garage closures

 

Online sales at Halfords Group rose by 76% in the third quarter of its financial year, when the retailer and automotive services business reported total group sales up by 11.5%, and retail sales 7.7% ahead of last year (+9.8%LFL). The company said in a trading statement today that this reflected investment in its web platform and the shift towards the channel.

 

Halfords also saw a 31% rise in sales as a result of in-store services, such as windscreen repairs. Strong demand for both motoring services and cycle repairs mitigated the effect of lower volumes of traffic generally.


The retailer is partway through its previously-announced plan to close up to 80 sites. So far it has closed 33, including 22 Cycle Republic stores, and it will close a further 47 shops and garages before the end of this financial year. It expects the move will boost profits by over £6m a year, after a one-off cost of up to £30m in the current year.

 

Looking ahead, the retailer is able to stay open during the current lockdown as an essential retail. It says it expects fewer car journeys will be made across the UK during this lockdown, with a knock on effect on demand for motoring products and services.

 

Halfords chief executive Graham Stapleton says: “We are pleased to have delivered a strong performance under hugely challenging circumstances, including our best ever Christmas week. Despite a large reduction in traffic on the roads, our strategically important autocentres business saw significant growth, with particularly strong demand for the services of our growing fleet of Halfords Mobile Expert vans.”

 

Halfords is a Top50 retailer in RXUK Top500 research.

 

Card Factory on strong online growth - but falling in-store sales

Card Factory today reported strong online growth, but falling in-store sales in the first 11 months of its financial year.

 

The retailer, ranked Top350 in RXUK Top500 research, said online sales grew by 137% LFL at Card Factory’s own website, and by 10% at gettingpersonal.co.uk, while in-store sales fell by 38.1%, reflecting mandatory Covid-19 closures for 37% of its trading days during that period. Sales via third-party partners grew by 63%.

 

Overall, in the first 11 months of the year, the retailer is reporting sales of £281.4m, down from £424.5m a year earlier. The retailer now expects that full-year sales will come in at £284m and that it will report a pre-tax loss of about £10m.

 

Card Factory executive chairman Paul Moody says: “Throughout 2020 we unwaveringly did all that was necessary to protect our colleagues and customers, making our stores one of the most Covid secure shopping experiences available. The financial investment has been significant, but critical to enabling us to meet our social responsibility.

 

“We have successfully pursued key strategic aims, including the acceleration of our digital capability."

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