Dunelm Group PLC told investors that first-half profit slipped despite higher sales, as a softer second quarter and the timing of costs offset a stronger gross margin and steady demand in core categories.
The homewares retailer reported total sales of £926.3m for the 26 weeks to 27 December 2025, up 3.6% year-on-year, with digital participation rising to 41% of sales.
Gross margin improved 60 basis points to 53.4%, which the group said was largely driven by FX gains while retail prices were held broadly stable.
Profit before tax fell 7.5% to £114.0m and diluted earnings per share declined to 41.7p. Free cash flow edged up to £171.4m, while net cash reduced to £13.3m. The board proposed an interim dividend of 17p per share and a special dividend of 25p per share, both payable on 8 April 2026.
Chief executive Clo Moriarty said trading has strengthened in early Q3 following a “good Winter Sale” and an encouraging response to new Spring ranges.
Dunelm added that it expects FY26 profit before tax to be in line with current consensus expectations and will publish a third-quarter trading update on 16 April 2026.