Q2, 13 weeks to 30th December 2023 Q2 total sales are up +1.0% YoY (FY24 Q1: +9% YoY) against tough comparatives last year when underlying sales grew by +14% YoY. Management believes Q2 sales were driven by volume and that it gained share in a market that was volatile. Gross margins are trending above full year guidance (full year: +100 bps YoY) and at H1 were are up +160bps YoY - having been +120bps YoY at Q1 - helped by tailwinds from lower freight rates. However, management expects gross margins headwinds in H2 but remains comfortable with guidance. Outlook and view Management expects no change to PBT expectations – the company-compiled consensus average of analysts' expectations for FY24 PBT is £202m, +4% YoY with a range of £199m to £207m. We note, that versus Q1, sales have grown +24% QoQ - in line with Dunelm’s historic trend of growing sales by c. 20% QoQ between Q1 and Q2 - and that today’s result effectively implies that total sales need to be c. +6% in H2, to meet existing pre-statement full year consensus sales growth estimates of +5% YoY. Whilst today’s result is certainly respectable, given tough comparatives following Dunelm’s strong ‘supernormal performance’ over the last three years, we worry that momentum is more at risk of slowing in the absence of any obvious catalyst to forecasts. The valuation, on 13.6x FY25E PE offers little protection in such an event.