Dunelm (LSE: DNLM) reported total sales of £1.83 billion for the 52 weeks ended 27 June 2026, representing year-on-year growth of 3.1%.
Profit before tax held steady at £211 million, with the company citing inflationary pressures and costs tied to sales volumes as factors weighing on profitability during the period.
The UK homewares retailer grew its market share to 7.9% over the financial year, while gross margin improved to 52.5%.
Free cash flow rose to £154.8 million and net debt declined to £94.6 million, reflecting continued progress in the group’s financial position.
Dunelm increased its ordinary dividend per share to 45.5 pence, though total dividends declared fell to 70.5 pence per share from 79.5 pence in the prior year, reflecting a smaller special dividend payment.
Digital sales reached 42% of group revenue during the year, as the company continued to expand and invest in its online operations.
The company launched its dedicated Dunelm app and introduced a beta version of an artificial intelligence-powered shopping assistant during the financial year.
Dunelm also recorded higher online conversion rates, increased store footfall and improved customer satisfaction scores across the period.
The group opened two new stores during the year and reopened its Yeovil location following a fire, bringing the total UK and Ireland store network to 204 locations.
Following a comprehensive review of the business, Dunelm launched a new customer-focused growth strategy called Winning Hearts and Homes, intended to support growth and strengthen its position in the homewares market.
Chief executive Clo Moriarty said the review identified additional growth opportunities for the business, with investment set to focus on capabilities and customer experience across both stores and digital channels.
The self-funded strategy is planned to be supported by around £125 million of additional capital expenditure over three years, alongside targeted cost savings across the organisation.
Dunelm plans to provide analysts and investors with further details on the strategy, including medium-term targets and financial guidance for the 2027 financial year.
Early trading in FY27 came in softer than expected, with management attributing the weakness to unusually hot weather affecting consumer demand for homewares products.
Despite the slow start, management said it remains confident in the underlying characteristics of the business as implementation of the Winning Hearts and Homes strategy begins, with a further trading update scheduled for mid-October.
