Homewares retailer Dunelm has revealed better than expected sales for its second half, with like-for-likes growing 5 per cent as it takes market share.

In the 26 weeks to June 27, total sales jumped 10.7 per cent to £215.2m. However, in the 52 weeks to June 27, like-for-likes slipped 0.5 per cent. In the same period, total sales increased 6.3 per cent to £417m.

Over the financial year the retailer expects gross margin to have increased 120 basis points. 

Dunelm upped its ad spend in the year as it “exploited opportunities to purchase additional press and radio coverage at favourable rates”.

Six superstores were opened in the year, taking Dunelm’s store count to 82 superstores and 12 older-format high street shops. 

Leases have been signed for 10 units due to open in the current financial year.

Chief executive Will Adderley said: “We are pleased with our recent trading performance – although as always, we can see lots of opportunities to keep improving.  

“The homewares market has declined in the last 12 months, but consumer spending does not yet appear to have been squeezed to the extent that many commentators were anticipating. Although spending may hold up for a little while yet, the prospect of increasing tax burdens on consumers and the possibility of a return to higher mortgage costs mean that we remain cautious in our outlook moving into calendar year 2010.

“We believe that, in these testing times, our ‘simply value for money’ proposition remains powerful for consumers, and that our modest average transaction values of around £25 help us to remain resilient. We will continue striving to give customers even better value in the coming year.” 

Singer Capital Markets analyst Matthew McEachran said Dunelm’s performance is “considerably better than expected and a result of continued improvement in retail execution”.