Dunelm's stock has almost doubled in value since Wharton took over in February 2011.

The company also reported a 7.3 rise in full-year pretax profit, pushing its shares up as much as 2.3 percent earlier in the day.

Chairman Geoff Cooper told Reuters that Wharton's resignation was part of a well-considered succession plan.

"The decision was made when we thought about the challenges that the company needed to face. Will Adderley was better positioned to deal with those than Nick and also other candidates we looked at for the chief executive position," he said .

Dunelm, which was founded by Adderley's billionaire father in 1979, has stepped up its focus on enhancing its product range and in-store representation of furniture.

The Adderley family owns about 54 percent of Dunelm, which sells bedding, curtains and kitchenware from over 136 stores across the UK. It opened 12 superstores during the year and has set itself a medium-term target of 200 such stores.

Will Adderley joined the board in 1992 and was the company's chief executive through its IPO in 2006, up until Wharton stepped into the role in 2011.

"We spent the last four years building some better processes in the business, tightening some things up, and now we are bringing opportunities to trade that stronger platform," Will Adderley told Reuters.

The company would now be "focussing very hard" on its customer offer, he added.

Dunelm reported a pretax profit of 116 million pounds ($187.84 million) in the 52-week period to June 28 from 108.1 million pounds last year.

Revenue rose about 8 percent to 730.2 million pounds.

Analysts on average expected full-year pretax profit at 116.36 million pounds, on a revenue of 728.24 million pounds, according to Thomson Reuters I/B/E/S.

Like-for-like sales grew 2.1 percent in the full-year from 1.7 percent a year ago, Dunelm said.

More direct sourcing from factories also enabled the company to push up gross margins by 80 basis points to 49.5 percent.

Leicestershire-based Dunelm declared a final dividend of 15 pence per share, up from 11.5 pence last year.

Dunelm shares, which rose to as much as 870 pence earlier in the day, were marginally down at 845 pence at 0847 GMT on the London Stock Exchange.

(Reporting by Aastha Agnihotri in Bangalore; Editing by Sunil Nair)