Dunelm Shares Fall Despite In-Line Annual Results

Dunelm Group (LON:DNLM) shares dropped more than 5% in early Tuesday trading after the homewares retailer posted annual results broadly in line with market expectations.

The homewares retailer revealed that for the year to 28 June 2025, it achieved revenue of £1.77 billion, up 3.8% from £1.71 billion a year earlier. Profit before tax rose 2.7% to £211 million, compared with £205 million the previous year. Diluted earnings per share increased 3.2% to 76.8 pence..

The results matched the company-compiled consensus estimates from 11 analysts, which pointed to revenue of £1.77 billion, profit before tax of £211 million and earnings per share of 77 pence.

The group also declared a total ordinary dividend of 44.5 pence per share, up from 43.5 pence, alongside a 35 pence special dividend paid earlier in the year.

Gross margin improved by 60 basis points to 52.4%, while digital sales rose to 40% of total sales, up from 37% in 2024, reflecting continued growth in Click & Collect. However, free cash flow dipped to £127 million from £132 million, while net debt nearly doubled to £102 million.

Chief executive Nick Wilkinson, presenting his final set of results before stepping down, said he was “pleased to report another successful year, marked by growth in sales and profits, increased market share and meaningful strategic progress.”

Despite the steady performance and reaffirmed confidence in long-term growth, investors reacted negatively, with Dunelm’s shares sliding more than 5% in morning trading.

Key Growth Drivers

• Market Share Gains: Increased share of the combined homewares and furniture markets to 7.9% (FY24: 7.7%).
• Digital Expansion: Digital sales now account for 40% of total sales, driven by strong growth in Click & Collect.
• Strategic Investments: Opened six new superstores, acquired a 13-store retailer in Ireland and the brand and archive of Designers Guild.

Looking ahead, Dunelm remains optimistic about its future prospects, despite acknowledging the absence of a sustained consumer recovery.

The company is focused on enhancing its customer offer, expanding its store network, and investing in growth and productivity drivers.

Dunelm is confident in achieving its medium-term market share target of 10%. Early trading in the new financial year is said to be positive, driven by a strong response to new Autumn/Winter product ranges and the upcoming launch of a Dunelm app.