Dunlem’s shares were hit in morning trading after the retailer said its full-year profits had fallen.
The home furnishings group’s sales were down 1.4% in the 13 weeks to June 30, with total revenue coming in at £236.5 million for the period.
Store sales were down 4.6% on a like-for-like basis to £179 million, while online sales grew 41.8% to £30 million.
For the full year, total revenues were up 9.9% to £1.05 billion.
The retailer expects profit before tax, before exceptional items, to be around £102 million, down from £109.3 million in the previous year.
Dunlem said the drop in sales was due to weak footfall across its shops.
The business experienced “disappointing” customer numbers during the key weeks of its summer sale, meaning it was unable to clear stock.
In morning trading, Dunelm’s shares were down 4.8p to 476p.
The profit fall for the full year will include trading losses at Worldstores, which the group acquired in November 2016, of around £8.5 million.
Dunelm will also take a £8.9 million one-off hit on the integration of the Worldstores business.
Dunelm chief executive Nick Wilkinson said: “I firmly believe that our homewares authority, combined with our increasing ability to adapt to evolving consumer trends, means that there is very significant potential for growth of the Dunelm brand.
“We have expanded our customer reach and digital capabilities significantly over the last 12 months and will continue to do so as we exploit the technology assets which we acquired with Worldstores.”