* Pretax profit up in first half on strong store sales
* Group to hike retail prices to cope with rising costs
* Dunelm says it can cope with inflationary pressures
(Adds share move, analysts' comments)
By Juliette Portala
Feb 9 (Reuters) - British retailer Dunelm announced
on Wednesday a second special dividend in less than six months
after robust demand for homeware and furniture helped it post a
record pretax profit in the first half, lifting its shares.
The group, one of Britain's largest homeware retailers with
more than 170 stores and an online presence, said it was hiking
retail prices where needed as it battles rising cost pressures.
During the pandemic, the company profited from rising
consumer demand for home improvement and strong digital sales.
Growth from its stores has remained encouraging.
As expected, inflation on commodity prices and freight rates
is now affecting the cost of stock purchases, Dunelm said, with
pressures seen growing into next year.
Britons are facing a cost-of-living crisis this year as
energy prices and inflation soar and taxes rise, leaving
shoppers with less disposable income that could force them to
curtail discretionary spending.
"If someone has a few hundred pounds less in their pocket
after paying the bills each month, they are going to make some
tough decisions," AJ Bell analysts said. "Do people really need
to buy more cushions for the home or new curtains?"
The brokerage said there could be a shift in products being
purchased as demand would remain for other items sold by Dunelm,
such as towels, lights, cooking equipment and bedding.
On the London Stock Exchange, Dunelm shares were up as much
as 4.9% after the group posted a 25.3% jump in profit before tax
to 140.8 million pounds ($191 million) for the 26 weeks ended
Dec. 25 and announced a special dividend of 37 pence per share.
"The surprise was a second special dividend in six months,"
analysts at Peel Hunt said in a note.
($1 = 0.7378 pounds)
(Reporting by Juliette Portala and Yadarisa Shabong; Editing by
Shailesh Kuber and Edmund Blair)