Homewares retailer Dunelm scored another success with investors today after forecasting that annual profits will be ahead of previous expectations.

The Leicester-based group’s shares surged more than 6% as Dunelm reported growth of 15.1% in like-for-like sales for the first 17 weeks of its financial year, broadly in line with the performance seen in mid-September.

Dunelm said its value for money offer and the withdrawal of competitors such as Woolworths had worked in its favour despite the recession.

Chief executive Will Adderley added: “Despite the continuing uncertainty about economic recovery, our sales performance has held up more strongly than was anticipated at the time we last updated the market.

“We believe that we are growing substantially more quickly than the market, reflecting the appeal of our Simply Value for Money proposition.”

He warned the company remained cautious about the second half of its financial year, given economic factors and more challenging comparatives.

The company, which has 98 stores under the Dunelm Mill name, brought forward its trading statement on November 12 in order to update the market on its better-than-expected progress.

It is the latest boost for investors after a strong year in which shares have climbed from 120p at the start of 2009 to 347p today.

The update led Numis Securities to raise its profits forecast for the year to June from £60m to £68m. The broker also added £9m to its 2011 forecast, at £76m.

Dunelm said it had opened four new superstores since the start of the financial year in June, in Norwich, Londonderry, Broadstairs and Bridgend. Further openings are expected in St Helens and Cheltenham.

The group, founded in 1979 as a market stall business, employs more than 5,000 full and part-time staff. The group, which is focused on the Midlands and North West of England, has plans to extend the chain to at least 150 superstores.