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Dunelm Shares Tumble 18% Amid Gloomy Christmas Outlook
15 Jan
Summary
- Dunelm's shares dropped 18% on Thursday, reaching their lowest price since April 2025.
- Challenging macroeconomic conditions and cautious spending are expected to lower annual profit.
- The company reported modest sales growth of 1.6% in its second quarter, down from 6.2%.
Shares in Dunelm experienced a steep 18% decline on Thursday, plummeting to their lowest price since April 2025. This significant drop followed a cautious Christmas trading update from the homeware retailer, which cited a challenging macroeconomic environment and subdued consumer spending as factors likely to impact its annual profit. The company reported a notable slowdown in sales growth, with its second quarter for the 13 weeks ending December 27, 2025, showing only 1.6% growth, a sharp decrease from the 6.2% achieved in the first quarter.
Dunelm now expects its pre-tax profit to be at the lower end of predictions, estimated around £227 million for fiscal 2026. Despite sales growth over the Christmas period matching last year's figures, weaker trading throughout the festive quarter has negatively affected first-half profits. This has limited the potential for stronger growth in the second half of the fiscal year. Competitor discounting, particularly around Black Friday, further pressured sales, although Dunelm aimed to maintain its margin position.
Analysts remain divided on the sector's outlook. While some point to potential support from interest rate cuts and easing inflation, others are concerned about a sustained tougher market for home and furniture. Despite the disappointing recent figures, there is cautious optimism for the sector in 2026, with Dunelm continuing to gain market share. Investors await further insights from the new CEO on medium-term growth strategies.
