Dunelm interim sales tick higher but profits flat; CEO to retire

In an update for the 26 weeks to 28 December, the company said total sales rose 2.4% to £893.7m, with pre-tax profit up just 0.2% at £123.2m.

Dunelm said it had been a "good performance in a challenging environment". It hailed another strong digital performance, with 39% of total sales generated through digital channels, up from 36% in the same period a year earlier.

The retailer said it was "encouraged" by early trading in the second half and that full-year expectations were unchanged and in line with consensus expectations for £209m pre-tax profit, with a range of £204m to £214m.

Dunelm also announced that chief executive Nick Wilkinson plans to retire from the group and full-time executive life, following seven years in the role.

It said the board will kick off a formal recruitment process for his successor, considering both internal and external candidates, and will provide an update in due course. Wilkinson will stay on in the role until a successor is appointed.

Wilkinson said: "Our performance over the first half reflects the growing attraction of the Dunelm offer for a wide range of customers, and the quality and resilience of our business model.

"Amidst a challenging backdrop for retail, those attributes have helped us deliver increased sales, a strong gross margin, and both customer and market share growth."

At 1000 GMT, the shares were down 0.3% at 968.04p.

Russ Mould, investment director at AJ Bell, said: "Dunelm is swimming in mud. Profit growth has ground to a halt as the retail backdrop deteriorates and consumers continue to watch every penny. Value-oriented retailers are struggling in this climate as lower-income individuals buckle under the strain of relatively high interest rates and a deteriorating jobs market.

"Dunelm appears to be doing everything it can. Margins are holding up, which implies it is avoiding widespread discounting, and it continues to take market share. It’s the best it can do under the circumstances until the backdrop improves.

"Chief executive Nick Wilkinson’s departure isn’t anything to worry about. He has helped to transform the business into one that now has a strong digital proposition and a solid store estate. If anything, he’ll be sorely missed by investors.

"His replacement - once appointed - will inherit a business with the right foundations to keep growing. Unlike many leadership changes in retail, Dunelm is not a turnaround story that needs someone new to steady the ship."