Dunelm set for lower first half profits but flags recovery after heatwave hit

Homeware retailer Dunelm has warned first half profits are expected to fall as it revealed a sales hit following heatwaves over the summer.

The group said total sales fell by around 3% in the first six weeks of its new financial year, because of the “exceptionally warm weather” as it also came up against ongoing tough trading and a shaky consumer spending backdrop.

But it flagged an improved performance in the following seven weeks to September 26, with total sales rebounding with about 4% growth, leaving total sales up 1.1% in the quarter.

On a like-for-like basis, the group saw sales fall 0.8%.

Dunelm said total sales fell by around 3% in the first six weeks of its new financial year (PA)

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It cautioned pre-tax underlying profits are set to come in lower than a year earlier, but kept its full-year guidance unchanged as it put faith in recovery plans to boost trading over its peak season and second half.

Clo Moriarty, chief executive of Dunelm, said: “I’m encouraged by the momentum we built as the quarter progressed, following the impact of the exceptionally warm weather.

“We’re taking clear actions to build a stronger customer proposition and create the capabilities needed to support our long-term growth.

“The early signs are encouraging and reinforce our confidence in the opportunity ahead.”

Dunelm announced plans last month to strip around £100 million of “unproductive” costs from the business as part of a new three-year growth strategy, after cutting its central teams by around 8%.

The cost-cutting programme will aim to make savings by the 2029 financial year through restructuring and changing internal processes.

Dunelm said at the time it had already removed around 8% of “central roles” – some 95 job losses across support functions and distribution – to “simplify the business and reduce central costs” as part of the overhaul.

The three-year strategy also includes efforts to improve and simplify the retailer’s product ranges, renew its chain of shops and open new ones.

Dunelm said it was targeting around 100 potential locations for new stores, with up to 10 new openings per year for the next three years, which will also create jobs.

In its latest update, Dunelm said its cost savings under the programme will “create capacity to invest in future growth opportunities, including establishing a dedicated change team and strengthening the use of data and analytics across the business”.