Dunelm posts record profit but warns on cost pressures

UK retailer Dunelm on Wednesday posted record first-half profit and declared a special dividend, as homeware and furniture sales continued to outperform the market but warned that cost pressures could see some price rises.

The group said profits for the six months to December 25 rose 25.3% to £140.8m, in line with estimates. It lifted the interim dividend to 14p from 12p and declared a special dividend of 37p a share to return to leverage in line with published capital policy.

The company, which operates from 170 stores across Britain, said trading to date in the second half, including its winter sale, had continued to be “encouraging” and expected that annual profit would be in line with recently upgraded expectations.

It added that the macro-economic outlook remained uncertain but the firm was “well placed to navigate inflationary challenges”.

"As expected, inflation on commodity prices and freight rates is now impacting the cost of stock purchases. We are collaborating with our committed suppliers to create sourcing benefits, managing the mix of products across price bands and, where appropriate, increasing retail prices," Dunelm said.

"Due to our levels of stockholding, we expect the impact of these pressures to grow as we move into full-year 2023. We remain committed to providing great value for money to our customers and feel confident in maintaining margins in line with our financial model."