UK retailer Dunelm warns heatwave hit sales in latest blow to shares

By Ankita Bora

Sept 8 (Reuters) - Dunelm warned that its 2027 profit could fall short of market expectations, driving its shares more than 10% lower on Tuesday, after unusually hot summer weather knocked sales at the start of the British homeware retailer's new financial year.

Industry data showed British shoppers cut back on big-ticket purchases such as furniture and household appliances in August in the latest challenge to Dunelm, which sells items ranging from armchairs to kitchenware.

Shares in Dunelm had fallen 10.9% to 790.7 pence at 0723 GMT after the company forecast its fiscal 2027 adjusted pretax profit to be broadly in line with the £211 million ($286 million) reported for fiscal 2026, which ended on June 27. 

Analysts were expecting fiscal 2027 profit of between £209 million and £221 million, a company-compiled poll showed.

Dunelm also detailed a new strategy which includes plans to simplify its product ranges and pricing, open up to 10 stores a year over the next three years and refurbish more than 50 existing locations by fiscal 2028. 

The new approach under CEO Clo Moriarty, who joined in October 2025, also involves removing about £100 million of costs over the next three years. Dunelm said in a statement it had cut around 8% of roles across its salaried staff in support and distribution teams since the start of the new financial year.

Dunelm, whose share price had fallen by 19.29% so far this year at Monday's market close, is targeting a return to mid-to-high single-digit annual sales growth over the next three years, supported by store expansion and digital investment. 

"We prudently assume special dividends pause for the first two years of the programme as Dunelm accelerates change," said Peel Hunt analyst John Stevenson in a note. 

($1 = 0.7388 pounds)

(Reporting by Ankita Bora in Bengaluru; Editing by Harikrishnan Nair, Rashmi Aich and Alexander Smith)