UK retailer Dunelm rides the summer wave while DFS feels the big-ticket pinch

By Yadarisa Shabong and Neeshita Beura

July 16 (Reuters) - British shoppers reined in spending on big-ticket furnishings in the past six months but snapped up garden items for the summer, a trend that dented orders at sofa seller DFS Furniture while lifting sales at retailer Dunelm, trading updates showed on Thursday.

Dunelm, which sells everything from bedding to kitchenware and garden furniture online and at its more than 200 stores across the UK and Ireland, reported a 2.9% rise in sales to £428 million ($579 million) in its April-June quarter.

This was driven by strong demand for its summer products, as consumers turned to online shopping over store visits during the heatwave in Europe, it said.

Shares in Dunelm rose 5% in early trade despite it sticking to its forecast that annual profit would slip as customers tightened spending due to uncertainty linked to the U.S.-Israeli war with Iran.

Meanwhile, sofa seller DFS said its order intake in the six months to June fell 4.4%, blaming a decline in consumer confidence and home purchases in part due to the Middle East crisis.

Its shares fell 1.8% in early London trade.

"There is almost a lipstick effect: I cannot build an extension or a new room, but I can buy a rug," said Peel Hunt analyst John Stevenson, adding that homewares tended to hold up better than big-ticket furniture during periods of consumer pressure.

Dunelm maintained its April outlook, saying it expects annual pretax profit to be within market expectations of about £210 million compared with £211 million it reported a year earlier.

The Leicester-based company said store footfall declined during two separate weeks in the final quarter due to extreme weather across Britain.

But margins were supported by cost discipline and favourable foreign exchange rates even as customers increasingly opted for discounted goods in the second half of its financial year ended June 27, it said.

Doncaster-based DFS forecast fiscal 2026 adjusted pretax profit of £45 million ($60.9 million), within its previously guided range, and 49% higher than the £30.2 million it reported a year earlier.

($1 = 0.7391 pounds)

(Reporting by Neeshita Beura and Yadarisa Shabong in Bengaluru; Editing by Sherry Jacob-Phillips and Emelia Sithole-Matarise)