Value homewares retailer Dunelm has delivered a better-than-expected performance in the first 17 weeks on the new financial year, as like-for-likes jumped 15.1%.

Total sales rocketed 25.5% to £154.7m, as Dunelm made further market share gains.

Gross margin improved 200 basis points, year-on-year.

The retailer said the strength and relevance of its Simply Value for Money proposition boosted sales, as well as reduced competition after the collapses of Woolworths and other smaller retailers. It also said it benefited from “relatively resilient consumer spending” as well as weak comparative figures in the equivalent weeks last year.

Dunelm expects the rest of the first half to “continue to be favourable”.

However the retailer said it is “much more cautious” for the second half, with the benefit from capacity withdrawal passing, the planned increase in VAT, possible public spending cuts and expected higher levels of unemployment.

The retailer expects to open 12 new stores in the current financial year. 

Dunelm chief executive Will Adderley said: “Despite the continuing uncertainty about economic recovery, our sales performance has held up more strongly than was anticipated at the time we last updated the market.

“We believe that we are growing substantially more quickly than the market, reflecting the appeal of our Simply Value For Money proposition. As a result the Board now has additional confidence that the Group is well positioned to achieve a sales and profit outturn for the first half of the financial year comfortably ahead of our previous expectations.

“We remain much more cautious about the second half of the year, given the impact both of external economic factors and our far more challenging comparatives. Nevertheless we now expect that the strength of performance in the first half will allow us to achieve a full year result ahead of our previous expectations.”