Dunelm flags profit at lower end of forecast as Middle East conflict hits consumer confidence

The homewares retailer now expects to deliver a pre-tax profit towards the bottom end of its £210m to £217m range.

It warned that while the ongoing instability in the Middle East would have a “small direct” cost impact in the current financial year, the “global events have resulted in a more uncertain external environment and it is not assuming any immediate improvement to consumer confidence”.

The retailer’s comments come as it posted a 2.1% increase in third quarter sales, which rose to £472m in the 13 weeks to March 28. Digital participation was up 2 basis points to 43%.

It reported that the period started well, with growth in line with its first half performance and a “positive response” to its new spring ranges.

However, it noted that more recently it had experienced a “period of broad-based softening”, particularly in March, with more consumers seeking out discounted products.

Dunelm chief executive Clo Moriarty said: “We saw further sales growth in Q3, against an uncertain backdrop for both customers and businesses.

“Although the external environment is not helpful in the short term, we continue to focus on the areas within our control – strengthening our proposition while operating efficiently and effectively. 

“Alongside this, we are making good progress building our long‑term growth plans with some exciting developments beginning to emerge, including a much stronger store opening pipeline and some encouraging early results from our recently launched app.

“Our final quarter provides multiple opportunities for Dunelm to stay front of mind for customers, including our popular summer sale. We remain confident that our comprehensive offer will continue to resonate with home lovers.”