Dunelm Group reported fiscal 2026 sales of £1.83 billion, up 3.1% year over year, while profit before tax remained flat at £211 million and the UK homewares retailer unveiled a new three-year strategy designed to accelerate its next phase of growth.
For the 52 weeks ended June 27, Dunelm generated £1.8255 billion in sales, compared with £1.771 billion in fiscal 2025. Store-enabled like-for-like sales increased 0.8%, while digital participation increased two percentage points to 42% of total sales.
Gross margin improved 10 basis points to 52.5%, while operating profit increased 1.3% to £224.9 million. Profit before tax remained at £211 million, with the PBT margin declining to 11.6% from 11.9% as higher gross profit was offset by higher operating costs and financing expenses.
Profit after tax was £155.5 million, compared with £156.3 million a year earlier, while diluted EPS was unchanged at 76.8 pence.
Dunelm delivered stronger cash generation during the year. Free cash flow increased to £154.8 million from £127.4 million, with operating profit conversion improving to 69% from 57%. Net debt declined to £94.6 million from £102 million.
The board recommended a final ordinary dividend of 28.5 pence per share, bringing the full-year ordinary dividend to 45.5 pence, up 2.2%. Dunelm also paid a 25-pence special dividend in April.
Dunelm continued gaining share despite what management described as a difficult consumer environment. Its share of the combined UK homewares and furniture market increased 10 basis points to 7.9%, while overall customer satisfaction improved by 2.4 percentage points.
The retailer cited geopolitical uncertainty, elevated interest rates, inflation and changes in the UK political environment as factors weighing on consumer confidence. Customers also became more selective and increasingly sought value through promotions, particularly across discretionary homewares categories.
Made-to-Measure products, lighting and storage were among the stronger categories during the year, while Dunelm also reported strong performance from its Summer Living ranges. A collaboration with designer Yinka Ilori moved from initial concept to stores and online in 18 months, with the rug range selling out within one month.
Dunelm continued investing in its physical and digital operations. The company opened two stores during fiscal 2026, including a smaller-format location in Wandsworth and a superstore in Kingston-upon-Thames, while reopening its Yeovil store following a fire.
The company also continued refurbishing existing stores and rolling out self-service checkouts and improvements to its Click & Collect operations.
Digital is becoming a larger component of Dunelm’s growth strategy. The Dunelm App has attracted approximately 740,000 downloads since its full launch in February 2026.
Customers shopping through the app are already spending approximately 40% more per transaction, while conversion is more than one percentage point higher. Dunelm also added a beta AI-powered shopping assistant in July.
The retailer also increased activity on TikTok and YouTube as it looks to expand digital customer discovery and engagement.
Dunelm is now moving into the next phase of its strategy under a three-year plan called Winning Hearts & Homes.
The plan is organized around three priorities: broadening Dunelm’s position as a homewares specialist, creating more seamless omnichannel customer experiences and transforming underlying capabilities to support sustainable growth.
Management said its assessment of the business during the past year indicated that Dunelm’s growth opportunity is larger than previously understood and that the company needs to evolve to capture it.
Dunelm enters the new strategy from a position of substantial scale. The company operates 204 stores across the UK and Ireland, employs approximately 12,000 people and offers products spanning furniture, bedding, curtains, blinds, kitchenware, dining, lighting, outdoor living, decoration and DIY.
Near-term trading has been more challenging. Dunelm said an extended period of unusually hot weather resulted in significantly softer sales during the first six weeks of fiscal 2027.
However, management said trading subsequently improved as temperatures cooled, with strong online conversion and increasing store footfall providing confidence in the underlying proposition.
KEY QUOTE:
“We delivered a solid performance for the year, growing sales, maintaining profits and generating strong cash returns for shareholders. My sincere thanks go to our loyal customers, our valued suppliers for their ongoing partnership and of course our tremendous colleagues who make all of this happen.
“Over the last year, we have taken a deep and honest look at our business and the opportunities ahead to better serve our customers and drive the Group’s performance. This work has given us confidence that the opportunity in front of Dunelm is larger than we previously understood, but also that we need to evolve. The strength of our business and balance sheet means we are well placed to invest for the future and accelerate our growth trajectory.
“To capture our opportunity, we are launching ‘Winning Hearts & Homes’, a customer-led, self-funded plan to strengthen our market leadership position. By building on the proven strengths that have made Dunelm so successful and by developing the capabilities that will support the next phase of growth, we believe we can create a bigger, better and bolder Dunelm for all our stakeholders.”
Clo Moriarty, Chief Executive Officer of Dunelm
