Dunelm Group (LSE:DNLM) delivered a resilient first-half performance for the 26 weeks ended 27 December 2025, with total revenue rising 3.6% to £926.3m. Digital sales continued to increase as a proportion of the mix, reaching 41% of group revenue and helping Dunelm add 20 basis points of market share in the UK homewares and furniture market to 7.9%. Gross margin improved to 53.4%, supported by favourable foreign exchange movements while pricing to customers remained broadly unchanged. Despite lower profit before tax of £114m and some cost inflation, the board maintained a progressive capital return policy, increasing the interim ordinary dividend by 3% and declaring a special dividend.
The group acknowledged a tougher consumer environment and weaker trading in the second quarter, but pointed to a recovery in early third-quarter sales following a well-received Winter Sale and encouraging customer response to new spring product ranges. Newly appointed chief executive Clo Moriarty highlighted ongoing growth potential as the business prepares to launch a fully featured shopping app and works to rebuild furniture stock availability. Management reiterated guidance that full-year profit before tax is expected to be in line with current market forecasts, underscoring confidence in Dunelm’s operating model and strategic direction.
Overall, the investment outlook is supported by constructive technical signals and a valuation viewed as broadly reasonable. Trading performance remains solid, although this is tempered by elevated leverage levels and a slowdown in free cash flow growth.
More about Dunelm Group
Dunelm Group is the UK’s leading homewares retailer, offering over 100,000 products across homewares and furniture categories, including bedding, textiles, kitchenware, lighting, outdoor ranges and DIY. The group operates 203 stores across the UK and Ireland alongside a fast-growing online platform featuring home delivery, Click & Collect and in-store tablet ordering. Its ranges are predominantly own-brand and sourced from long-standing supplier relationships.
Founded in 1979 as a market stall in Leicester, Dunelm has grown into a nationwide retailer with Pausa coffee shops in most UK stores, around 12,500 employees and headquarters in Leicester. Listed on the London Stock Exchange since 2006, the company has returned more than £1.5bn to shareholders through a combination of ordinary and special dividends since its IPO.
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