Furniture retailer’s new chief executive Clo Moriarty is targeting 10 new store openings a year and £100m of cost cuts

The newly-appointed chief executive of Dunelm has warned that record-breaking summer temperatures have affected her efforts to revitalise the home furnishings retailer.

Clo Moriarty, who joined the group from Sainsbury’s in October last year, said progress on her new strategy has been hampered by successive heatwaves that have kept shoppers away from the high street in recent months.

She told investors on Tuesday: “As a result of the extended period of unusually hot weather, we saw significantly softer trading in the first six weeks of [this financial year].”

Moriarty said she has “taken a deep and honest look” at the performance of the FTSE-250 group, and on Tuesday delivered its new ‘winning hearts and homes’ strategy to shareholders.

The Leicestershire-based retailer has a “compelling case” for an urgent overhaul, she argued, pointing to a slowdown in sales growth and market share gains in recent years, as reported by City AM.

“Competition has intensified and the external environment has become more challenging. Inflation and interest rates remain elevated, global uncertainty persists and consumers are understandably more cautious in their spending,” Moriarty said.

Dunelm posted a pre-tax profit of £211m in the year to June, flat on the year before, while revenue edged up by 3.1 per cent to £1.8bn. The former Sainsbury’s technology chief will spearhead a significant expansion of Dunelm’s store portfolio, with plans to open approximately 10 new sites annually over the next three years, backed by £125m in fresh capital investment.

The retailer will look to boost both the loyalty and spending habits of its current customer base by strengthening its reputation for value and streamlining its product offering.

Dunelm holds the top position in the UK’s £25bn homeware and furniture market, yet acknowledges that just 15 per cent of the population shop regularly at its stores.

Even among its most devoted customers, research has revealed that 80 per cent of their homeware expenditure continues to be directed elsewhere.

“We want to reach new customers and deepen our connection with existing ones, earning more loyalty and becoming the specialist they turn to for every mission in the home, whether they are refreshing a room, solving a practical problem, or creating a space they love,” Moriarty said.

Moriarty also outlined plans to harness artificial intelligence more effectively to streamline the firm’s supply chain, working with a more concentrated pool of suppliers.

The group has set its sights on delivering £100m in cost savings over the next three years. Wage inflation has proved a considerable “headwind” for the business, with staff costs climbing by £85m over the past four years.

Moriarty acknowledged her turnaround strategy will also encounter resistance from the “challenging” retail climate confronting Britain’s high street retailers.

“Geopolitical uncertainty, elevated interest rates and inflation, and a changing UK political landscape continued to weigh on consumer confidence,” she said.

Britons are shopping “more selectively,” particularly in discretionary categories such as homeware, and are increasingly seeking out promotional offers.