Dunelm has described its trading in the 26 weeks to 27 December as "solid", despite operating in a challenging environment.

The homewares retailer reported a 3.6% year-on-year increase in its total sales, which reached £926.3m in this period, while its digital sales margin increased by two percentage points to 41%.

Furthermore, its sales growth was ahead of the combined homewares and furniture market, with market share up 20 bps to 7.9%.

However, Dunelm reported that its profit before tax dropped by 7.5% to £114m, while its net cash also fell by 76% to £13.3m.

Dunelm’s H1 interim results follow a 17% reduction in its share price, after a "more challenging" Q2.

In its outlook, the retailer said that it has seen strong sales growth in Q3, which is more in line with H1 trading.

While acknowledging that the consumer environment remains challenging, Dunelm said it remains confident for its H2 period. The group expects its full-year profit before tax to be in line with current consensus expectations, ranging between £210m and £221m.

Chief executive officer at Dunelm, Clo Moriarty, commented: "We delivered a solid first half performance despite a softer second quarter, and we are seeing stronger sales growth in early Q3 following a good winter sale and an encouraging response to our new spring ranges.

"What I've seen so far gives me real confidence in our future. With only 7.9% market share and clear opportunities to enhance and expand our assets, we have significant headroom for growth."

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