Dunelm profits up despite ‘more difficult’ retail market

Homewares retailer Dunelm has shrugged off “more difficult” trading conditions to notch up higher half-year profits.

The chain posted a 4.8% rise in pre-tax profits to £123 million for the six months to December 30 after sales lifted 4.5%.

This came despite a sharp slowdown in sales growth to 1% in the final three months of 2023 compared with a year earlier, when sales had surged by 17.6%.

Dunelm said it is “pleased” with trading in 2024 so far thanks to a resilient customer base, but warned that the consumer outlook remains “uncertain”.

Leicester-headquartered Dunelm said recent improvements in profit margins will slow over its second half as it flagged that shipping costs are rising again, as well as a drag from currency movements.

The group said: “We are managing the impact of ships taking longer, more costly routes as they avoid the Red Sea area.”

It added: “We have a tight grip on operating costs and were therefore able to partially offset some of the inflationary increases and investment through productivity and efficiency initiatives.”

Chief executive Nick Wilkinson said the group had kept “our customers front of mind” as it faced into a “more difficult trading environment”.

“Despite ongoing pressures on consumers, we are encouraged by the wide variety of new customers shopping with Dunelm, and existing shoppers also coming back more frequently.”

He added: “Sales growth has predominantly been driven by volume, rather than through price increases, and we have grown customer numbers and frequency of shopping visits.”

The firm, which employs more than 11,000 staff, said it is on track for full-year profit expectations of £202 million in 2023-24.