Dunelm has shared details of its FY26 performance, alongside a three-year strategic growth plan, entitled Winning Hearts & Homes.
In the 52 weeks ended 27th June 2026, the retailer achieved sales of £1,825m, up 3.1% on FY25. Digital participation was up 2ppts to 42%, and gross margin up 10bps to 52.5%.
Dunelm achieved a PBT of £211m, in line with the prior year, alongside free cash flow of £155m (from £127m in FY25), representing 69% of its operating profit (57% in FY25).
The year also saw it open two new stores – a smaller store in Wandsworth, and a superstore in Kingston-upon-Thames – and reopen its Yeovil store following its closure due to a fire. It launched a new Dunelm app, with a beta-level AI-powered shopping assistant added in July.
CEO Clo Moriarty comments: “We delivered a solid performance for the year, growing sales, maintaining profits and generating strong cash returns for shareholders."
More recently, Dunelm saw significantly softer trading in the first six weeks of FY27, which it attributes to the extended period of unusually hot weather, yet it says it has seen strong online conversion and increasing store footfall, with better trading following the cooler weather.
The retailer has now launched a self-funded growth plan to deliver "a bigger, better and bolder Dunelm" across the next three years.
It envisages a return to sustainable mid- to high-single-digit sales growth, supported by increasing LFL sales, digital acceleration and store investment, aiming for an adjusted PBT margin of around 11%.
It says that capturing the growth opportunity requires investment, funded by its cash-generative model and structural cost savings. Plans include saving to invest through the removal of around £100m of unproductive costs from the FY26 base by FY29, and fully reinvesting in initiatives that support higher sustainable growth, plus increased capital expenditure totalling £125m above its recent run-rate across the next three years, including the expansion and renewal of its store estate.
The plan is three pronged: to "become the homewares specialist with something for everyone", simplifying its ranges and optimising pricing architecture; to "deliver seamless omnichannel experiences that customers love", extending reach, with up to 10 new openings each year, across some 100 potential locations, with more than 50 planned renewals by FY28; and to "transform our capabilities to drive sustainable growth", focusing resources by simplifying the business whilst investing in critical growth capabilities, improving its end-to-end processes and use technology.
Clo explains: “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.
“We want to reach new customers and deepen our connection with existing ones, earning more loyalty and becoming the specialist they turn to for every mission in the home, whether they are refreshing a room, solving a practical problem, or creating a space they love.
“By making it easier and more inspiring to shop with us, and investing in the capabilities we need for the future, we believe we can accelerate our growth and strengthen our market leadership. We are not changing the fundamentals of Dunelm - we are building on them with greater ambition."
Commenting on these announcements, Julie Palmer, managing partner at financial and real estate advisory group BTG, says: "As the retail industry struggles to pull people to the high street in a climate of hot weather and low consumer spending power, Dunelm has managed to achieve solid results and revealed a three-year strategy to give direction for the company and its investors.
"This plan also arrives as mortgage rates rise and the housing market slows down as people look to stay put during uncertainty. Whilst this is bad news for some, it gives Dunelm an opportunity to reaffirm its position as the go-to retailer for refreshing living space. And as much as solid results with increased margins are good, retailers need to be declaring that they have a plan for the future, rather than celebrating the past.
"In a climate of uncertainty, clarity on direction is essential for confidence. It is clear that today the focus of Dunelm's leadership will be on unveiling the detail of its strategy. Whilst much of the retail industry is facing difficulty, Dunelm will want and need to make clear that its offering is unique and can plough through the challenges to reap the opportunity and reward on the other side."
