Shares in Dunelm have fallen by over 17% after the homewares retailer reported that its second quarter was "more challenging", particularly around Black Friday and continuing into December.

The firm’s total sales increased by 1.6% year-on-year to £498m in Q2, with total sales jumping by 3.6% in the first half of the year to £926m.

However, Dunelm stated that this year, it saw an especially high level of competitive activity in both digital marketing and discounting, which led to softer sales in Q2.

While it recorded growth in the second quarter to be driven by its core categories, notably bedding, towels and lighting and made-to-measure divisions.

This was offset by softer trading in furniture, driven by availability challenges.

Dunelm added that this also highlights the ongoing challenging macroeconomic environment.

As a result, the retailer expects its first half profit before tax to be between £112m and £114m, while its full-year profit is set to be at the lower end of its £214m and £227m consensus expectations.

Chief executive officer at Dunelm, Clo Moriarty, said: "We delivered a solid first half, and I'm really proud of all our colleagues for their efforts over this busy period. The performance reflected a strong first quarter followed by a more challenging close to the half.

"Whilst the UK retail environment remains variable, we have acted on some clear lessons from the first half, including targeted steps to improve availability, ensuring customers can access our fantastic ranges seamlessly, however they are shopping with us.

"I see multiple opportunities to extend Dunelm's market-leading position - there is much more in the tank. As such, we are now moving forwards with energy and discipline, actively building new plans whilst executing existing ones to ensure we are the first choice for all home lovers."

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