Dunelm today confirmed plans to strip £100m of costs from the business and reinvest the savings into growth.
The company has launched a new three-year strategy, dubbed ‘Winning Hearts & Homes’, with the goal of accelerating sales, expanding its store estate and strengthening its digital proposition.
As part of the shake-up, Dunelm will remove around £100m of what it described as ‘unproductive costs’ from its FY26 base by 2029, with the savings fully reinvested into initiatives designed to drive growth.
It has already cut around eight per cent of salaried roles across its support and distribution functions since the end of its last financial year. The restructuring, alongside further efficiency measures, is expected to generate around £40m of annualised savings.
Dunelm will also ramp up investment in its store estate, with plans to open as many as 10 shops a year over the next three years. It said it has identified around 100 potential locations for new stores.
More than 50 existing stores are set to be renewed by FY28, while it will also invest further in its supply chain and technology infrastructure.
Dunelm expects to spend around £125m above its recent capital expenditure run rate over the three-year period, alongside £30m to £40m of one-off spending over the next two years to support restructuring and infrastructure improvements.
The company is targeting a return to sustainable mid-to-high single-digit sales growth under the plan, compared with its current growth rate of around three per cent, while aiming to maintain an adjusted pre-tax profit margin of around 11 per cent.
The strategy will also see Dunelm simplify parts of its product range, improve its pricing architecture and make greater use of its own brand across products.
It said selected categories could have as much as 40 per cent of their store ranges removed with limited impact on sales, freeing up space for more productive categories and ranges.
It is also looking to deepen its omnichannel offer after launching its new app earlier this year and introducing its AI-powered Ask Dunelm shopping assistant.
Customers using the app are already spending around 40 per cent more per transaction, according to the retailer.
Chief executive Clo Moriarty said Dunelm was building on its existing strengths with “greater ambition”, as it seeks to create a “bigger, better and bolder” business.
The growth push comes as the retailer reported a 3.1 per cent rise in full-year sales to £1.83bn for the 52 weeks to 27 June.
Pre-tax profit remained flat at £211m, while gross margin edged up 10 basis points to 52.5 per cent. Digital participation increased two percentage points to account for 42 per cent of total sales.
Free cash flow rose from £127.4m to £154.8m, while Dunelm’s market share edged up to 7.9 per cent.
However, the retailer warned that an extended spell of unusually hot weather resulted in “significantly softer” trading during the first six weeks of FY27.
Dunelm said trading had improved as temperatures cooled, with stronger online conversion and rising store footfall giving it confidence in the underlying proposition.
It currently operates 204 stores across the UK and Ireland and employs around 12,000 people.
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