Dunelm lifts sales and margins as it grows digital share despite Q2 slowdown

Dunelm Group ( (GB:DNLM) ) just unveiled an update.

Dunelm Group reported a solid first-half performance for the 26 weeks to 27 December 2025, with total sales up 3.6% to £926.3m and digital sales rising to 41% of revenue, helping it gain 20 basis points of market share in the UK homewares and furniture market to 7.9%. Gross margin improved to 53.4%, supported by foreign exchange gains while retail prices were broadly stable, and the board maintained its shareholder-friendly stance with a 3% uplift in the interim ordinary dividend and a special payout, despite lower profit before tax of £114m and higher cost ratios.

Management flagged a challenging consumer backdrop and softer second-quarter trading but noted stronger sales momentum in early third quarter trading following a successful Winter Sale and positive reaction to new spring ranges. New chief executive Clo Moriarty said the business retains significant headroom for growth as it rolls out a full shopping app and works to restore furniture availability, and the group guided that full-year profit before tax should be in line with current market expectations, signalling operational resilience and continued confidence in its strategy.

The most recent analyst rating on (GB:DNLM) stock is a Buy with a £1054.00 price target. To see the full list of analyst forecasts on Dunelm Group stock, see the GB:DNLM Stock Forecast page.

Spark’s Take on GB:DNLM Stock

According to Spark, TipRanks’ AI Analyst, GB:DNLM is a Outperform.

Dunelm Group’s overall score reflects strong technical indicators and a fair valuation, supported by positive earnings call insights and corporate events. Financial performance is solid but tempered by high leverage and declining free cash flow growth.

To see Spark’s full report on GB:DNLM stock, click here.

More about Dunelm Group

Dunelm Group is the UK’s market-leading homewares retailer, offering more than 100,000 products across homewares and furniture, from textiles and bedding to kitchenware, lighting, outdoor items and DIY. The group operates 203 stores in the UK and Ireland as well as a growing online platform with home delivery, Click & Collect and in-store tablet sales, and it predominantly sells specialist own-brand ranges sourced from long-term suppliers.

Founded in 1979 as a Leicester market stall, Dunelm has expanded into a nationwide chain that also features Pausa coffee shops in most UK locations, employs about 12,500 people and is headquartered in Leicester. Listed on the London Stock Exchange since 2006, the company has built a reputation for value, quality and choice, and has returned more than £1.5bn to shareholders through ordinary and special distributions since its IPO.

Average Trading Volume: 370,660

Technical Sentiment Signal: Sell

Current Market Cap: £1.9B

Learn more about DNLM stock on TipRanks’ Stock Analysis page.