Homewares retailer Dunelm says it has been forced to stockpile in an effort to tackle ongoing problems in its supply chain.
In a recent trading update - for the 13 weeks to March 26, 2022 - the Leicester-headquartered company revealed that is has been building up 'a higher level of inventories' to mitigate the disruption to the supply chain and ensure there is plenty of stock available for customers.
It added that inventories reached £224 million towards the end of March - this is up from £193 million in 2021 and £147 million in 2020.
The business said: "We have been building a higher level of inventories to mitigate against ongoing supply chain disruption and to ensure better availability for our customers. As a result, the second half of the financial year includes some additional stockholding costs. We expect inventory levels to remain broadly similar through to year-end."
Despite the costs associated with keeping more products in storage, and the higher price of raw materials, Dunelm has recorded a big jump in sales.
For the third quarter, it recorded total sales of £399 million - 69 per cent higher than the same period in 2021 when shops were closed to customers and only click and collect and home delivery services were available.
Compared with the first 10 weeks of 2020 – before the pandemic – sales were up 31 per cent in the same period this year.
Dunelm attributes this partly to the success of its winter sale which saw a 'very strong sales performance' across most categories and added that its new 'summer living' products performed particularly well during March 2022.
Elsewhere, its new furniture fulfilment hub in Daventry, Northamptonshire, became fully operational during the 13-week period and is now ramping up capacity, while a new Dunelm superstore opened in Leeds.
Nick Wilkinson, chief executive officer, said: "It has been another good quarter for Dunelm with sustained growth across all of our homewares categories, particularly as customers ready their homes and gardens for the summer.
"Performance has been strong across all channels and our new facilities for e-commerce and furniture fulfilment are now fully operational, which will enhance our multi-channel proposition, whilst providing the capacity for further growth.
"Whilst the macro environment remains uncertain, with significant headwinds and increasing pressures on the consumer, our wide product range offers choice for every budget, whether replacing everyday essential items or refreshing a room in your home.
"The resilience of the Dunelm business model and the ability of our colleagues to adapt quickly to changing circumstances give us confidence in our plans and we remain well placed to continue to grow market share."
