Dunelm bucks the trend: sales rise despite Britons cutting back on housing spending

Dunelm has bucked the trend among Britons to cut back on spending on their homes as it has enjoyed higher annual sales and profits.

And the homewares powerhouse appears to be attracting a more fashion-conscious audience, with sales growth among Londoners and younger shoppers aged 16-24 leading the way.

Customers have been purchasing custom-made window treatments, kitchen products and upholstered furniture, Dunelm said.

Dunelm revealed that its sales rose 4.1 per cent to £1.7bn in the year to June 29, following improved results in stores and online.

Turnover growth was boosted by a 6.2 percent increase in merchandise volumes, which offset a slight decline in the value of average items sold.

Volumes were supported by a 5.1 percent increase in customer numbers, with growth recorded across all age, income and geographic demographic groups.

While it saw a slowdown in trading during the spring and summer amid colder weather conditions, the group said its summer sales “performed particularly well.”

Higher sales helped boost the Leicester-based company’s pre-tax profits by 6.6 per cent to £205.4m, as did gross margins which improved by 170 basis points despite the Red Sea Crisis.

Many shipping companies have diverted their vessels around the Cape of Good Hope following attacks by Houthi militants, adding considerable time and costs to voyages.

However, Dunelm said it had avoided “any significant impact” from the disruption by “working closely with our freight providers to manage the impact of the surcharges.”

Nick Wilkinson, Dunelm’s chief executive, said: “The strong set of results is testament to the hard work of our adaptable and committed colleagues.”

‘In a period where consumers faced inflationary pressures and competing demands on their disposable income, we have continued to raise the level of relevance and value we offer at Dunelm.’

The UK homewares market has endured tougher times over the past two years as rising interest rates and cost-of-living concerns have dampened Britons’ appetite for sprucing up their properties.

Dunelm said it was “gradually seeing” more promising economic signs, but warned that the timing of a recovery in the sector “remains uncertain”.

However, the company has seen a “solid start” to the new financial year and was optimistic about increasing its market share to 10 percent in the medium term.

Russ Mould, investment director at AJ Bell, said: “A focus on boosting its online operation, strengthening brand awareness and providing the right products at the right price in the right places has helped make Dunelm one of the key success stories in the UK retail sector in recent years.”

Dunelm Group shares fell 3.6 per cent to £11.90 on Wednesday afternoon, making them one of the biggest fallers on the FTSE 250 index.