Will there be a soft landing for cushions, curtains and beddings seller Dunelm? The company has done an excellent job in recent years of improving its online retail operation and getting the right mix of quality and value to appeal to shoppers.
However, what might have seemed good value six or 12 months ago could be beyond the reach of many households now mortgage and energy costs are escalating. The pandemic trend of looking to spruce up a living space in which people had been spending an inordinate amount of time also seems to be well and truly over.
AJ Bell’s Russ Mould said: “The good news is that Dunelm’s outlook for the current financial year is unchanged – testament to some impressive resilience. While it pays to be sceptical of businesses attempting to get you to look at anything other than the previous year’s sales as a point of comparison, Dunelm’s sales are well ahead of pre-Covid levels and there’s no doubt pent-up demand helped play a part in its 2021 performance.
“Dunelm, like lots of retailers just now, faces a difficult challenge in terms of how far it is prepared to cut prices to keep the tills ringing. Go too far and margins will be squeezed beyond breaking point, and it might be difficult to push prices back up when the economic backdrop improves.
“One crumb of comfort for Dunelm is that it is doubtless better placed than some of its rivals and could come out the other side of the current turmoil with an improved market share.”