Dunelm warns profits could slip as Iran war rocks consumer spending
Dunelm has warned investors that profits could be at the lower end of expectations as the war in Iran hits consumer spending.
The homewares retailer said trading in March had softened as shoppers delayed purchases amid uncertainty caused by the conflict.
Sales for the three months to 28 March were up 2.1 per cent at £472million, a slowdown from the 6.3 per cent rise in the same period in 2025, as it navigated an 'uncertain consumer environment.'
While Dunelm, which runs 203 stores across the UK, said it expected only a 'small direct cost impact' from the war, it warned that annual profits could fall if consumer confidence remains in the doldrums.
'Consumer confidence has been rocked by the energy shock created by the conflict in Iran,' said Dan Coatsworth, head of markets at AJ Bell.
'While costs aren't expected to see too big of an impact immediately, Dunelm knows inflationary pressures are coming down the track.'
Sales softened in March as uncertainty triggered by the Iran war delayed spending
He added: 'With demand for furniture and homewares having strong ties to the housing market, the cracks emerging in property demand are also unhelpful.'
Dunelm said it expects annual pre-tax profits at the lower end of market expectations of between £210million and £217million.
'Although the external environment is not helpful in the short term, we continue to focus on the areas within our control – strengthening our proposition while operating efficiently and effectively,' said chief executive Clo Moriarty, who took the top job in October 2025.
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Dunelm reported a drop in profits in the run-up to Christmas in what it called a 'challenging' environment.
The retailer has tried to attract shoppers by improving product ranges and enhancing operations, which helped boost overall first-half sales, but aggressive discounts from competitors weighed on the second quarter.
Shares in Dunelm are down 27 per cent in the year-to-date, having fallen 4 per cent this morning.
Tesco also joined the growing chorus of retailers who are cautious about the impact of the Iran war on sales.
Boss Ken Murphy said the war created 'further uncertainty' in its outlook for the year, as the supermarket giant widened the range of its profit guidance.
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