Britain’s Dunelm Group reported first-half sales of £926 million, a 3.6% increase. However, the homewares retailer warned that full-year profit will land at the low end of forecasts. Q2 growth slowed sharply to just 1.6%, a stark contrast to the stronger first quarter. The company cited a difficult macroeconomic environment for the challenging trading conditions.

Dunelm’s digital sales reached 42% of total revenue in Q2, climbing two percentage points from the prior year. Gross margin improved by 60 basis points, helped by favorable foreign exchange rates. The retailer maintained disciplined promotions despite heavy discounting across the sector. Core categories like made-to-measure products performed well, though furniture sales were softer and prompted recovery plans.

Chief Executive Clo Moriarty acknowledged a tough close to the half. She said the company is taking steps to improve stock availability across both digital and physical channels. Dunelm now expects full-year profit before tax near £222 million. Trading since the quarter’s end, including the Winter Sale, has shown improvement, offering a glimmer of hope for the second half.