UK homewares retailer Dunelm Group PLC (LON:DNLM) sees 2018 underlying profits falling “moderately below” last year’s after weak consumer demand hit sales.
The company reported a 4.7% drop in like-for-like store sales for the fourth quarter to date, saying trading conditions have been “materially more challenging than had been expected, within a soft homewares market”.
Online like-for-like sales jumped 43.7% but the weak sales at stores meant overall sales rose just 0.1% in the period.
In mid-afternoon trading, shares plunged 14% to 522p.
Dunelm has become the latest victim to a difficult retail environment, with consumers tightening their purse strings due to the squeeze of higher inflation and sluggish wage growth.
Bricks and mortar retailers have particularly suffered as more consumers do their shopping online.
READ: Dunelm shares rise as retailer sees good third quarter sales performance
Chief executive Nick Wilkinson said: “We have seen an unexpectedly challenging start to the fourth quarter, with continuing softness in the homewares market and reduced footfall to our stores.”
But Wilkinson said the group is making good progress on its strategic plans to be a multi-channel retailer and has been improving its customer offerings.
"We will learn from recent trading and I remain optimistic about our ability to deliver strong sales and profit growth in the future,” he said.
Dunelm expects total sales for the full year of around £1.05bn, up 9.8% on the prior year’s £955mln. It said it is also on track to achieve “strong gross margin growth” from trading in the fourth quarter.