Dunelm lifts dividend as profits rise, but LFL sales decline

11th Feb 2014 08:09

- Interim dividend up 11.1 per cent- Revenues rise 4.8 per cent, but LFL sales fall- Company 'cautious' about consumer spending trendsHomewares retailer Dunelm raised its interim dividend by 11.1 per cent after profits edged higher in its first half, but said that like-for-like (LFL) sales declined due to an unusually warm summer last year.The company, which owns 140 stores in the UK, said that total revenues during the six months to December 28th were up 4.8% at £356.3m, helped by the opening of six new stores and the relocation of another. Chief Executive Nick Wharton said that Dunelm delivered "strong trading results" during the first half and made "further important strategic progress".He said he was "encouraged" by the early results from Dunelm's first TV advertising campaign which was launched during the period.However, LFL sales fell by 0.9% which "reflected the marked reduction in footfall during the unusually warm summer weather", the company said.Pre-tax profit grew by 2.9% to £61.6m, as 4.8% top-line growth and a 90 basis-point increase in the gross margin to 50.4% were partly offset by an 8.1% rise in operating costs relating to the store opening programme.The company said it continued to generate strong levels of cash flow, which rose 18% to £75.1m. This helped it to lift its dividend for the first half to 5p per share, from 4.5p the year before.Looking ahead, Wharton said he was "cautious" about consumer spending trends overall. However, he added that "the combination of a customer offer that continues to appeal to a broad spread of consumers, a significant new store growth opportunity and an exciting multi-channel agenda all provide us with a high degree of confidence in Dunelm's future growth prospects".The stock was 2% higher at 927p in early trading on Tuesday.BC