Dunelm sales grow in first half but Q2 slowdown hits outlook

Dunelm has reported a solid first-half performance despite noting that trading conditions became more challenging in the second quarter, prompting the homewares retailer to lower its full-year profit expectations.

The group said total sales rose 3.6% to £926m in the six months to 27 December 2025, supported by a strong first quarter. Sales growth slowed in the second quarter to 1.6%, with revenue of £498m, as consumer demand weakened around Black Friday and into December.

However, the retailer saw customers’ digital participation increase by 2% to 42% in the quarter, while gross margin improved by 60 basis points year-on-year in the first half, largely due to favourable foreign exchange movements.

Dunelm said the second quarter was marked by heightened competitive activity, particularly in digital marketing and discounting, while the company maintained a disciplined approach to promotions. Core categories such as bedding, towels and lighting continued to drive growth, and Made-to-Measure products again performed strongly.

Trading in furniture was weaker, partly because of availability issues, although the group said recovery plans were in place. Since the end of the quarter, Dunelm had seen a stronger customer response to its winter sale, with growth running ahead of second-quarter levels.

Pre-tax profit for the first half is now expected to be about £112m to £114m. The retailer said full-year pre-tax profit for the year ending 2026 is now expected to come in at the lower end of market consensus.

Dunelm continued to invest in its store and digital estate during the period, opening its second inner London store in Wandsworth and reopening its Yeovil store following a fire last year. It plans to open up to two further superstores in the second half and has launched a new Dunelm app ahead of a full customer rollout in February.

Clo Moriarty, chief executive of Dunelm, said: “We delivered a solid first half, and I’m really proud of all our colleagues for their efforts over this busy period. The performance reflected a strong first quarter followed by a more challenging close to the half.

“Whilst the UK retail environment remains variable, we have acted on some clear lessons from the first half, including targeted steps to improve availability, ensuring customers can access our fantastic ranges seamlessly, however they are shopping with us.”

She added: “I see multiple opportunities to extend Dunelm’s market-leading position – there is much more in the tank. As such, we are now moving forwards with energy and discipline, actively building new plans whilst executing existing ones to ensure we are the first choice for all home lovers.”