Dunelm targets faster sales growth with £100 million cost-cutting and store expansion plan

Dunelm targets faster sales growth with £100 million cost-cutting and store expansion plan

Dunelm Group PLC (LSE:DNLM) has unveiled a three-year growth strategy targeting a return to mid-to-high single-digit annual sales growth, backed by around £100 million of cost savings and accelerated investment in stores and digital channels.

The FTSE 250 homewares retailer said its ‘Winning Hearts & Homes’ plan aims to lift growth from around 3% currently while maintaining an adjusted profit before tax margin of approximately 11% and return on capital employed of around 30%.

Dunelm plans to remove around £100 million of what it described as unproductive costs from its 2026 financial year cost base by 2029, with the savings fully reinvested in growth initiatives.

The company has already reduced central teams by around 8%, with restructuring and further cost measures expected to generate about £40 million of annualised savings.

Investment will include up to ten new stores annually over the next three years, with Dunelm identifying around 100 potential locations.

More than 50 existing stores are also earmarked for renewal by 2028.

Capital expenditure is expected to run around £125 million above the recent run-rate over the three years, alongside £30 million to £40 million of one-off spending across the 2027 and 2028 financial years.

For the 2027 financial year, Dunelm expects adjusted profit before tax to be broadly in line with 2026, with £25 million to £30 million of cost reductions funding a similar amount of growth investment.

Capital expenditure is forecast at £60 million to £70 million.