Dunelm Group PLC saw its share price slide to the lowest point in almost 12 months after the company issued a profit warning on Thursday. Management cited a challenging macroeconomic backdrop and highly cautious consumer spending as key factors that would erode full-year earnings forecasts. The drop in the share price was more than 15% on the day of the announcement, wiping out over £400 million in market value.

For the six months ending late December, Dunelm recorded total revenue of £926 million, an increase of 3.6% compared to the same period last year. This growth was driven by a strong performance in the autumn homewares collections, but was offset by a slowdown in demand after the peak trading period. Gross margin contracted by 60 basis points as promotional activity intensified to stimulate footfall in stores.

In the three months to December 27, Dunelm’s comparable sales growth slowed sharply to 1.6%, down from 6.2% in the prior quarter. The company pointed to heightened competition from value-focused retailers and a shift in consumer behaviour toward essential purchases. Online sales accounted for 37% of total revenues in the period, up from 34% a year earlier, but delivery costs and returns continued to weigh on profitability.

Dunelm has withdrawn its previous guidance for adjusted pre-tax profit of around £175 million, indicating that full-year earnings are now likely to fall below analysts’ consensus of £160 million. In response, the retailer plans to accelerate cost-saving measures, including the closure of underperforming concessions and a review of logistics partnerships. Management also confirmed an ongoing £50 million investment in its digital platform to drive long-term revenue resilience.