Dunelm sees sales slip ahead of ‘challenging winter’ for shoppers

Homewares retailer Dunelm has revealed sliding quarterly sales and warned over a “challenging winter for consumers” as the cost-of-living crisis deepens.

The group posted an 8.3% fall in total sales to £356.7 million for the 13 weeks to October 1 in a sharp reversal of trading over the past year when the group was boosted by the pandemic trend for Britons to focus on their homes.

Dunelm said it came up against very strong comparatives from a year earlier, when sales lifted from pent-up demand and due to its summer discount sale.

Compared with pre-pandemic trading in 2019-20, its first-quarter sales jumped 36%, it added.

It warned of a difficult economic backdrop, with the highest inflation for 40 years bearing down on consumers, but said it will offer value and choice to cash-strapped shoppers and kept its full-year outlook unchanged.

Official figures on Wednesday showed inflation returning to a 40-year high of 10.1% in September, up from 9.9% in August, showing the pressure facing UK households.

Retailers across the sector are widely reporting a drop in consumer confidence and signs that shoppers are reining in their spending.

Dunelm chief executive Nick Wilkinson said: “As we enter what will clearly be a challenging winter for consumers, our absolute focus remains on making every pound count for everyone through a tight grip on operations.

“We will continue to offer outstanding value at all price points so our customers can make their own choices around adapting to the economic backdrop.

“This focus on value has seen Dunelm successfully navigate previous periods of economic uncertainty.”

The group also noted that its profitability slipped in the first quarter, with gross profit margins down year on year as customers return to “more normal” shopping patterns than during the pandemic.

Digital sales have plateaued, making up a third of overall group sales in its first quarter, in line with a year ago as shoppers return to stores.