Trading Update

Dunelm Group plc
08 January 2008



8th January 2008


                                DUNELM GROUP PLC


                                 TRADING UPDATE


Following the end of the 26 week trading period to 29th December 2007, the
specialist out-of-town homewares retailer Dunelm Group plc ("Dunelm" or "the
Company") today makes the following comments on trading.


Financial performance


The Company has continued to achieve an increase in both total and like for like
("LFL") sales through to the end of the half year, as follows:

Total sales            £197.4m (26 weeks to 30th December 2006: £178.4m)
Total sales growth     +10.6%
LFL sales growth       +4.9%


Stores included in the LFL population comprise 63 superstores, 13 high street
stores and the Dunelm webstore.


Product gross margin over the 26 weeks is expected to have been approximately
80 basis points higher than during the equivalent period last year. This
reflects a stable pricing environment and continuing sourcing gains primarily
due to volume increases.


Operating costs have remained tightly controlled during the period.


Store portfolio


During the period, new superstores opened successfully in Aberdeen, Shoreham,
Peterborough (where the existing high street store has been closed), Eastbourne
and Dumfries. The geographic diversity of these openings demonstrates the
nationwide appeal of the Dunelm proposition, and underlines the scale of the
roll-out opportunity which still exists. As at 29th December 2007 the Company's
portfolio included 73 superstores, with the Board still committed to a medium
term target of at least 150 superstores.


Further openings will take place in Leeds and Bournemouth during January, with
Sittingbourne and Huddersfield expected to follow before the financial year-end.
This would bring the total number of openings in the financial year to nine.


All of the sites referred to above are leasehold properties with the exception
of Leeds which was acquired as a freehold in the early part of the current
financial year.


The Board believes that the retail warehouse market will, over the next 12 to 18
months, become increasingly favourable to occupiers with strong covenants. As a
consequence the pipeline of potential openings for the next financial year is
looking strong and includes one leasehold unit on which contracts have already
been exchanged (Ebbw Vale).


Will Adderley, Chief Executive of Dunelm, commented:


"We are delighted to have maintained such a strong like for like sales
performance during a period when we estimate the homewares market has shown
little or no growth. As usual, we have done this without compromising our
customer proposition based on everyday fair prices and 'Simply Value for Money'.


With all that has been said and written about a slowdown in the consumer
economy, we naturally approach the next few months with caution. Having said
that, we feel our exposure is limited by our relatively low transaction values -
our shoppers on average spend under £30 on each visit. In addition, the business
is in better shape than ever and whatever the economy may throw at us, I am
confident we will find opportunities which we can exploit."


Dunelm will release its interim results on 27th February 2008. There will be a
presentation for analysts at 9.30am in the offices of UBS, 1 Finsbury Avenue,
London EC2M 2PP. Those analysts who wish to attend are requested to contact
Natasha Jobling of Hogarth Partnership on the number below. A copy of the
presentation will be made available on the Company's website.


                                    - ends -

Dunelm Group plc                                       0116 2644 356
Will Adderley, Chief Executive
David Stead, Finance Director

Hogarth Partnership                                    020 7357 9477
John Olsen / Fiona Noblet







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