Home furnishings retailer Dunelm Group has reported a solid first-half performance despite a challenging trading environment, with sales growth ahead of the wider homewares and furniture market.

For the 26 weeks to 27 December 2025, the business delivered total sales of £926m, up 3.6% year on year, compared with £894m in the prior period.

The performance saw Dunelm increase market share by 20 basis points to 7.9%, underlining continued outperformance versus the combined homewares and furniture market.

Digital participation rose by two percentage points to 41%, reflecting ongoing customer engagement across Dunelm’s multichannel offer as the business prepares for the full launch of its app in the spring.

Gross margin strengthened to 53.4%, up 60 basis points year on year, largely driven by foreign exchange gains, with retail prices held broadly stable. Profit before tax, however, fell to £114m from £123m, reflecting softer trading in the second quarter and the timing of certain costs.

Free cash flow increased slightly to £171m, including a timing benefit of £93m, while Dunelm declared an interim ordinary dividend of 17.0 pence per share, up 3% year on year.

A special dividend of 25.0 pence per share was also announced, down from 35.0 pence in the prior year.

Trading in the early part of the second half has improved following a softer second quarter (Q2), with Dunelm reporting stronger sales growth in the third quarter (Q3) to date, more in line with the first half overall.

The retailer said the uplift followed a successful Winter Sale and positive customer response to new Spring ranges.

Chief executive Clo Moriarty (above), who joined the business in October, said Dunelm’s performance reflected the strength of its brand and operating model.

“We delivered a solid first half performance despite a softer second quarter, and we are seeing stronger sales growth in early Q3,” Moriarty said. “What I’ve seen so far gives me real confidence in our future.”

Looking ahead, Dunelm said it remains confident in its second-half plans, with furniture availability recovery measures in place and further digital investment planned. The group expects full-year profit before tax for fiscal year (YR) 2026 to be in line with current market expectations of £210m to £221m.

Moriarty said with market share still below 8%, the business has “significant headroom for growth”, supported by a continued focus on customer experience, product excellence and retail discipline.

“There is much more in the tank, and I’m excited for what lies ahead,” she added.

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