Homewares industry rival Next (NXT) set the bar high with its strong Christmas trading update and latest profit upgrade, so there is pressure on UK market leader Dunelm (DNLM) not to disappoint with its second quarter update on 18 January, which includes the festive selling period.

Another stand-out retail sector performer, Dunelm rarely disappoints and Shares suspects the FTSE 250 bedding, curtains and kitchenware seller may have benefited from value-focused consumers spending on Christmas bedding and decorations as well as festive lighting and from the demise of competitor Wilko, although the self-styled ‘Home of Homes’ may have found shifting big ticket categories such as furniture more challenging.

On 19 October, Leicester-headquartered Dunelm reported a robust first quarter performance with a 9% year-on-year increase in total sales to £390 million, ahead of the 8.2% called for by consensus, with both the brick-and-mortar and digital channels performing well.

The outlook for 2024 also looks more encouraging since inflation has fallen compared to last year and the UK consumer is now experiencing real wage growth again. Dunelm, which is aggressively rolling out new stores, should be among the key beneficiaries of any improvement in consumer confidence. 

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