Dunelm ups profit outlook but warns of price rises as costs jump

Home furnishings chain Dunelm has said record Christmas trading is set to help annual profits beat expectations, but cautioned over price hikes.

The group said it rung up sales of £407 million in the festive quarter to December 25 – up 13% on a year earlier and 26% higher when compared with 2019, before the pandemic struck.

It saw online sales double in the quarter on a two-year basis, but also hailed “particularly encouraging growth” in its 176 stores.

Dunelm said the strong sales and profit margins have put it on track for a 25% leap in first half pre-tax profits to around £140 million, while it also said the full-year outlook is now “materially” better than expected.

But it became the latest retailer to caution over moves to increase price tags to offset rising costs.

It said the group will look to hike prices “where appropriate” as it battles to offset rising commodity and freight costs.

Dunelm will also look to mitigate inflation by working with suppliers and managing the mix of products across price bands.

Shares in the firm lifted 5% as investors focused on the profits cheer.

Dunelm said it saw sales growth across nearly all its product categories, with a particularly strong showing from furniture ranges.

Nick Wilkinson, chief executive of Dunelm, said: “Whilst there are several macro uncertainties to be navigated, we feel well placed to continue to deliver profitable growth across all channels and grow market share.”

Retail analysts at Peel Hunt said Dunelm is a “business on form”.

They added: “The customer proposition continues to resonate strongly with consumers, reflecting strong range curation, value credentials and accelerating digital capabilities.”