Dunelm Group PLC (LSE:DNLM) fell on Thursday after news of stronger sales was overshadowed by concerns around growing costs for the homeware retailer.
Sales climbed by 1.6% in the second quarter to £490 million, taking first-half revenue up 2.4% to £894 million, Dunelm said on Thursday.
Improvement came despite a “challenging market,” Dunelm added, leaving full-year pre-tax profit in line to sit within the consensus range of £207 million to £217 million.
Gross margin had also improved by 10 basis points, setting the figure up to sit at the higher end of Dunelm’s guided 51% to 52% range.
Dunelm flagged growing costs on the back of last October’s Budget though, pointing to “initiatives to drive productivity” in order to mitigate pressures.
“Whilst the national living wage increase was largely anticipated, the increase in employer national insurance contributions is an additional cost headwind,” it said.
“As we navigate this challenging environment, we see even more opportunities to harness our unique business model, raise the bar on our proposition and fulfil our ambitions,” chief executive Nick Wilkinson added.
Shares fell 3.4% to 995p on Thursday.