Dunelm sees profits rise but cautions consumers remain under pressure
The retailer reported a 6.6% rise in pre-tax profits to £205.4 million for the year to June 29 after sales rose 4.1%.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Homewares chain Dunelm said it overcame a tough market to lift annual sales and profits, but cautioned it was yet to see a “meaningful” recovery in consumer spending.
The retailer reported a 6.6% rise in pre-tax profits to £205.4 million for the year to June 29 after sales rose 4.1%, with a marked pick-up in sales growth to 5% in the final three months.
But Dunelm said it was continuing to see a “challenging consumer environment” and warned “the timing of a sector recovery remains uncertain”.
Shares in the group were 3% lower in afternoon trading on Wednesday.
Nick Wilkinson, chief executive of Dunelm, said: “Whilst we are gradually seeing improvements to economic indicators, we are yet to see a meaningful change in consumer spending habits in our markets.
“Against this backdrop, and compared to a strong first quarter last year, we have made a solid start to full-year 2024-25.”
Consumers are not letting go of the reins... At some point that will change and consumers will feel more confident
He told the PA news agency that while consumers have been boosted by last month’s interest rate cut and lower energy costs, this has yet to feed through to confidence levels and spending.
He said: “Consumers are not letting go of the reins.
“They’re still saving and paying down mortgages at a higher rate then you’d typically expect.
“At some point that will change and consumers will feel more confident.”
The Leicester-headquartered group said it had held off from raising prices over the past year, instead driving higher revenues with strong growth in sales by volume, which lifted by 6.2%.
It said sales in the new year would continue to be driven by volume growth as it boosts its share of the homewares market, which reached 7.7% in the year to June.
The firm has set itself a new target to boost its market share to 10% over the next five years or so.
Dunelm saw sales growth pick up to 5% in its final quarter to June 29, up from 2.6% in the previous three months.
But many homewares retailers have said they are seeing slumping demand for so-called big ticket products, with under-pressure consumers putting off large purchases.
Mr Wilkinson told PA that its shoppers are not trading down, but are being more selective in their choice of purchase.
Dunelm said its profitability was also helped in the past year by lower freight costs as it was able to avoid any significant impact from the Red Sea shipping disruption.
It said it worked “closely with our freight providers to manage the impact of surcharges, while using the capabilities within our commercial teams to minimise availability issues”.
Mr Wilkinson also told PA that a focus on offering essential ranges for students is proving popular as the new academic year starts.
He added the group is seeing an 80s comeback, with big interior trends from that decade having a resurgence, including primary colours – such as yellow, cobalt blue and emerald green – striking patterns and bold graphic prints.
Founded in 1979, Dunelm now has 184 stores across the UK and employs around 11,500 staff.