Highlights

  • Jefferies and Investec issued buy ratings with target prices of GBX 1,075 and GBX 1,080, while Panmure Liberum maintained a sell rating at GBX 830.
  • Total sales increased to GBP 926.3m, with digital channels contributing 41% of revenue.
  • Interim dividends totalled 42.0p per share, including a 25.0p special dividend.

Dunelm Group plc (LSE:DNLM) has attracted mixed reactions from brokers following the release of its interim results for the 26 weeks ended 27 December 2025. While Jefferies and Investec Bank (UK) PLC issued buy ratings with target prices above current trading levels, Panmure Liberum maintained a sell rating. The diverging views come as the homewares retailer reported higher sales alongside lower year-on-year profit before tax.

Brokers Issue Diverging Ratings

Panmure Liberum reiterated a sell rating on Dunelm, setting a target price of GBX 830. The broker’s stance followed a decline in profit before tax and diluted earnings per share during the first half of FY26.

In contrast, Jefferies issued a buy rating with a target price of GBX 1,075, while Investec Bank (UK) PLC also rated the shares a buy, assigning a target price of GBX 1,080. Both brokers highlighted sales growth, margin performance, and digital participation as key factors behind their outlooks.

Sales Growth and Digital Contribution

Dunelm reported total sales of GBP 926.3m for the first half, representing a 3.6% increase compared with GBP 893.7m in the same period last year. Digital sales accounted for 41% of total revenue, up from 39% in H1 FY25, continuing the shift toward online channels.

Gross margin increased by 60 basis points to 53.4%, largely supported by foreign exchange movements, while retail pricing remained broadly unchanged. Net operating costs rose as a percentage of sales to 40.5%, up from 38.4% in the prior year.

Profit, Cash Flow, and Dividends

Profit before tax declined by 7.5% year-on-year to GBP 114.0m, while diluted earnings per share fell to 41.7p from 45.0p. The Group generated free cash flow of GBP 171.4m, slightly above the GBP 168.5m recorded last year, supported by timing-related inflows.

Net cash stood at GBP 13.3m at the end of the period, compared with GBP 57.1m a year earlier. Dunelm declared an interim ordinary dividend of 17.0p per share, an increase of 3.0%, alongside a special dividend of 25.0p per share.

Outlook and Current Trading

The company noted improved sales trends in the early part of Q3 following a softer second quarter. Management expects profit before tax for FY26 to be in line with current market consensus, supported by the planned launch of its app in spring and progress on furniture availability.

Dunelm’s interim results prompted varied responses from brokers, with buy ratings from Jefferies and Investec balanced against a sell view from Panmure Liberum. As sales growth, digital participation, and dividends remain in focus, market attention is likely to stay on trading trends in the second half of the financial year.

FAQ

Q1: What ratings have brokers issued on Dunelm after the interim results?
A1: Jefferies and Investec issued buy ratings, while Panmure Liberum maintained a sell rating.

Q2: How did Dunelm perform in terms of sales during H1 FY26?
A2: Total sales increased by 3.6% year-on-year to GBP 926.3m.

Q3: What dividends did Dunelm declare for the interim period?
A3: Dunelm declared an interim ordinary dividend of 17.0p per share and a special dividend of 25.0p per share.