Dunelm (LSE:DNLM) reported a resilient first-half performance despite a challenging UK retail backdrop, with total sales rising 3.6% year-on-year to £926 million. Digital sales continued to gain share, accounting for 41% of group revenue, while gross margin improved by 60 basis points, supported in part by favourable foreign exchange movements.
Momentum eased during the second quarter, however, particularly around the Black Friday period and into December. The slowdown reflected intensified promotional activity across the sector and softer demand within furniture categories. As a result, the group said full-year pre-tax profit is now expected to come in toward the lower end of current market forecasts.
Despite near-term trading pressures, Dunelm continues to invest in initiatives aimed at strengthening its long-term market position. These include further store openings, enhancements to its mobile app, and improvements in product availability, which management believes will support customer engagement and reinforce its leadership in UK homewares.
From a market standpoint, the shares are underpinned by constructive technical indicators and a valuation viewed as broadly fair. Management commentary and recent corporate developments remain supportive, although solid operational performance is tempered by elevated leverage and a slowdown in free cash flow growth.
More about Dunelm Group
Dunelm Group plc is the UK’s leading homewares retailer, offering more than 100,000 products across categories including home textiles, furniture, kitchenware, lighting, outdoor living and DIY. Founded in 1979, the Leicester-based group operates 203 stores across the UK and Ireland alongside a growing online platform, employing around 12,500 people. Dunelm focuses heavily on own-brand ranges and value-led propositions, complemented by services such as made-to-measure window treatments and in-store Pausa coffee shops.
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