Financial analysis ' report' on Dunelm Group plc - Essay Example

Financial analysis Report on Dunlem Group plc. Financial analysis Report on Dunlem Group plc. Overview of the Home Retail Industry in the U.K.The value of the home retail industry in the UK is said to have dipped by a 2.2 percent margin in the year 2012. The reason for this is the economic recession that impacted on the spending of consumers. The recession also put pressure on the major industry players who had to reduce their prices. The home retailing industry can be divided into several categories, bedding, table linen, window dressings, kitchen and bathroom textiles, and the covers and cushions category.

Since 2010, the industry’s value has decreased. Nevertheless, the industry has benefited from the economic recession through variations in the trends shown by the consumers such as more spending on home products so as to save. Another trend among consumers is their increased use of the internet to buy products the industry has on offer. Thus, competition has risen. It is expected that the industry’s value will continue to fall (Key Note Media Centre, 2013). Industry players are expected to venture more into the use of online market as will be shown through an outlook of two industry players; Dunelm Group plc and Home Retail Group plc.

Dunelm Group plc.Dunelm Group plc was founded in 1979. It is located in Watermead Business Park. Dunelm Group plc headquarter is in Syston, LE7. The main executives of this company include CEO Will Adderly, financial director David Stead, the founder and long-term president William Adderly, and the company secretary Dawn Durrant (Dunelm Group plc, 2013).The company is involved in the sale of home furnishings and home wares. The company sells bedding like duvets; curtains and curtain accessories; bedroom furniture; cushions and cushion covers; home and electrical accessories; dining accessories just to name but a few.

Dunelm group operates a hundred and thirty-seven stores and its brand name, Dunelm. It also has an on-line presence from where customers can order products at their convenience. Currently, the company continues to be successful in spite of the economic pressures facing it. The success is evidenced by it continued expansion plan through opening of new stores in the UK. As indicated in its strategic priorities, it intends to develop and take advantage of its infrastructure, develop its specialization, and expand further through various channels (Dunelm Group plc, 2013).

The market capitalization stands at 1.75 billion pounds. It is listed in the London stock exchange with a total of 201.92 shares in issue. As of June 28th, 2014, the company’s revenue totalled 730.15 million pounds, which compared to the last year’s revenue for a similar period, it was an increment by 52.96 million pounds. Its operating income for the same period this year was 116.03 million pounds. It made 89.07 million pounds profit after tax from continued operations. As of September 2014, the number of employees stood at 8,000.

The future for this Dunelm Group plc is strong. The strength is indicated by its growth in revenue each year. The revenue for this year increased by 7.8%. The company has continued to open new stores showing an intent to expand and grow (Stephens, 2014).Home Retail GroupHome retail group is the parent company of Homebase and Argos. It is located in Central Milton Keynes and operates in the UK and the Republic of Ireland (Bloomberg Businessweek, 2014). It was founded in the year 1964 by Sir Terence Conran as Habitat store.

Following its demerger from GUS plc, Home retail group was launched in the year 2006 as Home Retail Group. Hence, the company boasts of more than 100 years of market operation that shows that it has been successful over the years in spite of changes in the economic environment. Its major executives include CEO John Walden; executive and financial director Richard Ashton; and human resource director Julie Elder. The company has 47,000 employees. The products sold by the company include consumer electronics, video games, domestic appliances, home and garden products, and android platform based products (Yahoo!

Finance, 2014). The number of stores operated by the company stand at 1,057 stores. Out of the 1,057 stores, there are 336 Homebase stores and 734 Argos stores (Home Retail Group, 2014). The table below shows the company’s revenues, gross profit, and the operating income for years ending 2013, March 2nd and 2014, March 1st.Year ending 2014 March 12013 March 2Revenue(£)5,663.05,475.0Gross Profit(£)1,763.81,732.1Operating Income(£)108.1100.0Net Income(£)54.086.9Table 1: Table showing the revenue, gross profit, operating income and net income as of 2014 March 1 (Bloomberg Businessweek, 2014).

Currency in millions.ReferencesBloomberg Businessweek, 2014. home retail group. [Online] Available at: http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=HOME:LN[Accessed 22 November 2014].Bloomberg Businessweek, 2014. home retail group (HOME:London). [Online] Available at: http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=HOME:LN[Accessed 22 November 2014].Dunelm Group plc, 2013. Annual report and accounts 2013, London: Emperor Design Consultants Ltd.

Home Retail Group, 2014. Financial Performance. [Online] Available at: https://www.homeretailgroup.com/investor-centre/financial-performance/[Accessed 22 November 2014].Key Note Media Centre, 2013. Market Conditions Dampen Home Furnishings Market in the UK. [Online] Available at: https://www.keynote.co.uk/media-centre/in-the-news/display/market-conditions-dampen-home-furnishings-market-in-the-uk/?articleId=1021[Accessed 22 November 2014].Stephens, P., 2014. Should You Buy Dunelm Group plc Or Home Retail Group Plc?. [Online] Available at: http://www.fool.co.

uk/investing/2014/09/11/should-you-buy-dunelm-group-plc-or-home-retail-group-plc/[Accessed 22 November 2014].Yahoo! Finance, 2014. Home Retail Group PLC (HOME.L). [Online] Available at: https://uk.finance.yahoo.com/q/pr?s=HOME.L[Accessed 23 November 2014].