UK homeware retailer Dunelm Group posted third-quarter (Q3) sales growth of 2.1% to £471.6m ($639m), but said demand softened during March amid a more uncertain backdrop for consumers.
For the 13 weeks to 28 March 2026, the company said gross margin improved by 30 basis points year on year.
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Sales for the year to date increased 3.1% to £1.39bn.
Digital sales accounted for 43% of Q3 revenue, up two percentage points, while the year-to-date figure reached 42%.
The company said trading was robust in the early part of the quarter, helped by its winter sale and spring product ranges.
However, it reported a “broad-based softening” in demand later in the period, with March seeing particular weakness.
Dunelm said the uplift in gross margin was aided by favourable foreign exchange movements carried over from the first half.
At the same time, it said shoppers were increasingly choosing discounted lines over full-price products.
The retailer said full-year profit before tax for FY26 is now expected to come in towards the lower end of market expectations.
It added that second-half cost plans remain on schedule. The group also said instability in the Middle East is likely to have only a limited direct cost effect in the current financial year.
On digital operations, Dunelm said it had completed the full launch of its mobile app in Q3, with downloads exceeding 300,000.
The business also reported early gains in conversion and average spend per transaction.
The retailer is also increasing its store estate, with a larger pipeline of openings planned for the next financial year.
This includes a new branch in Kingston-upon-Thames due to open later this year.
Dunelm noted that it remains confident in its long-term growth outlook, although it does not expect a near-term recovery in consumer confidence as global uncertainty continues.
Dunelm Group CEO Clo Moriarty said: “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.”
