Dunelm interim profits fall after softer Q2

(Sharecast News) - Homeware retailer Dunelm reported a drop in interim profit on Tuesday following softer trading in the second quarter, but backed its profit expectations for the year and said sales had picked up in the third quarter. In the 26 weeks to 27 December 2025, pre-tax profit fell 7.5% to £114m, while revenue ticked up 3.6% to £926.3m. The lower profit also reflected the timing of certain costs.

The retailer said it had been a half of two quarters, with strong sales growth of 6.2% in the first quarter, followed by a softer Q2 at 1.6%. Sales in Q2 missed the company's expectations, and while there are some identifiable reasons for this, Dunelm pointed out it's the third year in a row it has seen lower growth in Q2.

"We deliberately opt to be disciplined in our promotional activity in the run up to Christmas, holding our two main sales in January and June," it said. "However, we are currently reviewing the role our Q2 trading approach plays for customers and the impact on our business."

Dunelm said consumer confidence remained subdued in the first half, with market data pointing to a particularly challenging December for both homewares and the UK retail sector more generally. It also highlighted an "extremely competitive" Black Friday period, both in terms of the depth of discounts and performance marketing spend.

Dunelm said sales growth in the third quarter to date has been strong following the softer Q1, and more in line with the first half as a whole.

The consumer environment remains challenging, with variable trading patterns, but the company said it remains confident in its plans for the second half, with the full launch of the app due in spring and furniture availability recovery plans in place.

The retailer said it expects FY 2026 pre-tax profit to be in line with consensus expectations £214m, and a range of £210m to £221m.

Dunelm announced an interim dividend of 17p per share and a special dividend of 25p.

Chief executive Clo Moriarty, who joined the company in October, said: "We delivered a solid first‑half performance despite a softer second quarter, and we are seeing stronger sales growth in early Q3 following a good Winter Sale and an encouraging response to our new Spring ranges.

"What I've seen so far gives me real confidence in our future. With only 7.9% market share and clear opportunities to enhance and expand our assets, we have significant headroom for growth. We will build on our existing strengths with relentless customer focus, product excellence and retail rigour, underpinned by the financial discipline for which Dunelm is known. There is much more in the tank, and I'm excited for what lies ahead."

At 1020 GMT, the shares were up 0.8% at 944.50p.

Shore Capital, which rates the stock at 'buy', said: "With news today that there has been improvement in trading in Q3 to date (more in-line with H1 as a whole) the signs are that this was more a one-off blip rather than a turning point in the company's fortunes.

The broker said that despite a slower Christmas, "Dunelm has not become a weak business overnight".

"With shares notably de-rated on recent news, we view the current weakness as an excellent entry price to what remains a quality retailer," it said.