Dunelm has shelved plans to run its stores as community click and collect points following the Prime Minister’s announcement last night. It says it had planned to run delivery and befriending services to support local people, but says that it is now reviewing its approach in the light of Boris Johnson’s decision to close all non-essential retail shops.
Dunelm, an Elite retailer in RXUK Top500 research, says it is reverting to its key business principles of do the right thing and ‘long-term decisions’ to guide decision making as it now looks to rethink its business for the future.
“We remain determined to ensure that we use these challenging times to develop a stronger proposition for our customers which will ensure that when this pandemic is over, we have an even better business,” it said in today’s update.
In the meantime, it is holding onto cash and cancelling the April dividend. It is going to draw down the full £175m of lending that is available to it and keep extra cash on deposit “given the heightened levels of uncertainty”. It is also reducing capital expenditure and cutting back on non-essential operating costs, including at board level, where directors will either waive or reduce their non-executive pay over the next three months.
Nick Wilkinson, Dunelm chief executive, said: “"These are unprecedented times, but Dunelm is a strong business which has been built over 40 years on the foundations of close relationships with our customers, colleagues, suppliers and shareholders. Our business principle to ’Do the right thing’ is more important than ever in the current situation.
"We have a very strong team in place who are adaptable and committed to ensuring the long-term success of the business. We are navigating the challenges of this situation, acting in the interests of all our stakeholders, and doing the work necessary to ensure that we come through this crisis in a stronger position and with a better business for the future.”
Dunelm also updated investors on third-quarter trading. It said that total sales, including new stores, were up by 7.9% and like-for-like sales – which strip out the effect of store openings and closures – rose by 6.5% in the first 10 weeks of the quarter, to March 7. Over that period, store sales were up by 2.4% while sales over dunelm.com were up by 31.9%.
Over the past two weeks, to March 21, coronavirus has hit business, with like-for-like sales down as store footfall declines. However, it says, “our online business continues to grow and in recent days, as store footfall has fallen further, we have seen a material increase in online demand.”
The business is not giving financial guidance for the 2020 full-year and beyond in the light of the uncertain financial environment.
Image courtesy of Dunelm