53 weeks ended 2nd July, 2022 Pre-reported full year sales are £1,553m +16% YoY (+47% 2YoY). PBT is £209m +32% YoY and in line with our forecasts. Pre-reported full year gross margins are 51.2%, -40bps (H1: +80bps) - due to the extra Summer Sale in the year. Free cash flow is £153m (LY: £108.5m), helped by strong cash generation despite some investment into inventory - which is c.+30% YoY - owing to building up inventories to mitigate supply chain disruption earlier in the financial year. The final dividend is 26p (LY:23p). Net debt is £23.8m (LY: net cash £128.6m) after paying £282.1m in dividends including a special dividend of £207m. Outlook Following the “solid” start to July, trading remains “robust” for the first ten weeks of the year. However, sales are currently “down” YoY having been -6.5% YoY at Q4 FY22. In the meantime, management remains mindful of inflationary pressures and continues to expect gross margins to return to their long run average in FY23 (c. 50%). However, management expects to meet consensus expectations (consensus FY23 PBT: £178m). View Previously, we had concerns that Dunelm’s proposition lacked authority, leaving it exposed to potential structural pressures, yet its consistent trading outperformance throughout FY22, coupled with market share gains of 140bps YoY in the Homewares, and healthy active customer and sales per customer growth - up 8.5% YoY and 7% YoY respectively – has assuaged such concerns. However, with wider macro-economic pressures mounting, market forecasts may not be reflecting such risks. We note that pre-statement consensus continues to expect flat YoY sales growth this year (despite tough two-year comparatives) with growth returning to +4% YoY in FY24, as well as pre-tax margins declining just 200bps. With this said, the valuation on c.10x FY23E remains undemanding. It is difficult to balance the risk of further forecast downgrades against a valuation that appears to price in much of this risk, but at this juncture we are wary of turning more positive. HOLD