BUSINESS LIVE: Inflation edges down to 6.7%; Dunelm profits slip; Galliford Try boosted: M&G profits

Dunelm’s profits fell despite record sales “at a time of widespread economic uncertainty”.

The homeware retailer said pre-tax profit fell 7.8 per cent to £192.7m in the 52 weeks to 1 July.

Dunelm achieved record sales of £1.4 billion, up 5.5 per cent on last year but below consumer price inflation, which reflects price rises last year.

The retailer weathered the pandemic as homeowners improved their properties, which saw Dunelm’s stock enter the top 1,500. The stock halved to a low of less than 700p last September, but Dunelm shares have rallied since then, rising 37.6 per cent over the past year and 8.4 per cent this year.

M&G has reported better-than-expected profits thanks to improved market conditions and rising interest rates.

The investment firm revealed adjusted pre-tax profit jumped from £298m to £390m in the six months to the end of June. This came well ahead of the £284m expected.

M&G also announced its return to the defined benefit pensions market with two deals for a combined consideration of £617m.

Matt Britzman, equity analyst at Hargreaves Lansdown, said: “This is the first business done in the region since the annuity book closed in 2016 – it’s becoming a hot spot for some of the big insurers, so competition is likely to heat up, but it does provide another string to M&G’s bow.

Inflation has slowed, but is still above the level of comparable countries.

Investment firm M&G has revealed that adjusted profit before tax rose from £298m to £390m in the six months to the end of June.

It said: “Detracts from the strong contribution of our Retail and Savings segment based on the improved performance of the for-profit business and higher returns on excess assets in the shareholder annuity portfolio as a result of rising interest rates.”

Construction group Galliford Try has reported good results, helped by the fact that the Housing Company no longer has, and profits increased by almost 20 percent.

Andy Murphy of the investment research firm said Edison Group commented: “Galliford Try has posted very encouraging results today, with profits up 18.4 per cent from £18.5m to £21.9m.

“Galliford Try specializes in infrastructure and environmental projects and gave up the house building part in 2020. These choices have made Galliford Try’s business model uniquely sustainable in challenging times for the industry and the entire economy.

“Infrastructure projects are against cyclical fluctuations, and the pursuit of net zero has increased the demand for environmental projects. In addition, giving up house building has protected the company from the decline in the housing market that started earlier this year.

“With uncertainty rife around the property market, Galliford Try is well placed to capitalize on many of the long-term trends in British construction.”

The slowdown in consumer price inflation to 6.7% in August takes it to its lowest level since February of last year.

The drop was also against expectations, with economists and the Bank of England predicting a rise to 7.1% from 6.8% in July. This was expected to be due to the sharp rise in petrol and diesel.

But while today’s numbers are well received, things don’t look so good for the next inflation number as oil prices climb towards $100 and fuel costs continue to rise.

Dunelm revealed a drop in annual profits as rising costs and a slowdown in the property market took their toll.

The previously high-flying homewares retailer said it expects to return to profit growth in the coming year.

Dunelm revealed a 9.4 per cent drop in pre-tax profit to £192.7m in the year to July 1.

Dunelm said consumer behavior remains “unpredictable” but forecast growth in sales and pre-tax profits in 2023-24.

The FTSE 100 was up 0.1 percent, or 7 points, at 7,660.2 just after opening this morning.

The ONS revealed at 7am that inflation had eased to 6.7% in August from 6.8% in July.

The drop in the central consumer price index from 6.9 percent to 6.2 percent is seen as good news.

This will take some pressure off the Bank of England before tomorrow’s base rate decision. The bank is still expected to raise the key rate by 0.25 percentage points to 5.5%, but this could be its last hike.

The ONS said in the information:

• The biggest impact on the monthly change in the consumer price index came from food, whose prices rose less in August 2023 than a year ago, and accommodation services, where prices may be unstable and fall in August 2023.
• The increase in motor fuel prices led to the biggest change in annual prices.
• The core CPI (excluding energy, food, alcohol and tobacco) rose 6.2% in the 12 months to August 2023, up from 6.9% in July; The annual rate of CPI goods increased slightly from 6.1 percent to 6.3 percent, while the annual rate of CPI services slowed from 7.4 percent to 6.8 percent.