Dunelm predicts profit growth

However, the company said it remained cautious about the consumer environment.

The firm, which trades from more than 110 Dunelm Mill stores selling items such as bedding, curtains, kitchenware and lighting, said sales at stores open over a year grew by 1.1 per cent in the first half.

That compares with a fall of 1.2 per cent a year earlier.

Like-for-like sales growth in its second quarter, which runs to the end of December, was 3.8 per cent, reflecting a bounce back from Christmas 2010 when trading was hit by heavy snow.

Dunelm, founded in 1979 as a market stall business selling ready-made curtains, said gross margin improved by 10 basis points and predicted that first half pre-tax profit would come in at around £52m versus the £48.5m reported a year ago.

With British shoppers’ disposable incomes squeezed by rising prices, muted wages growth and government austerity measures, store chains had a tough Christmas, using early sales to attract customers. They do not expect 2012 to be much better.

“We remain cautious about the impact of the UK consumer environment on our trading in the near term. Nevertheless, with eight further store openings already committed ... we remain confident in the future growth prospects for the business,” Nick Wharton, Dunelm Chief Executive said in a statement.

The company said it was still committed to reaching its medium term target to operate between 150 and 200 superstores across the UK.

Overall group sales, including new stores, rose by 8.8 per cent to £299.9m in the first half.