(Reuters) -British homeware retailer Dunelm Group reported a rise of 3.8% in annual sales on Thursday, as strong summer demand and a focus on value attracted cost-conscious shoppers against a bleak economic backdrop.
British households, pressured by high living costs and economic uncertainty, are increasingly turning to value-driven alternatives.
The company, which sells items ranging from armchairs to kitchenware, said customers responded well to its summer sale and outdoor living ranges, with warmer weather driving interest in seasonal products.
Shares of Dunelm rose as much as 1.5% to 1,158 pence by 0718 GMT.
Dunelm said its gross margin is now expected to come in 60 basis points higher on the year, driven by strong full-price sales and minimal discounting across seasonal categories.
But it cautioned there were still no clear signs of a sustained recovery in consumer confidence.
Pre-tax profit for full year 2025 is expected to be in line with consensus estimates, with analysts forecasting 210 million pounds, based on a company-compiled average.
Like its retail peers, Dunelm has been investing in digital improvements, such as integration of AI-powered search, to improve customer engagement and retention.
“Although we note that cost headwinds remain, most notably from wage inflation, we believe DNLM should be able to offset some of this through improvements in digital and automation,” analysts at RBC Capital Markets said in a note.
Dunelm, which last week named Sainsbury’s executive Clodagh Moriarty as its new CEO, posted total sales of 1.77 billion pounds ($2.37 billion) for the year ended June 28, in line with market expectations, data compiled by LSEG shows.
($1=0.7473 pounds)
(Reporting by Aatrayee Chatterjee in Bengaluru; Editing by Rashmi Aich)
