The homeware retailer was a bit all over the place in 2017. The first half of the year was pretty unpleasant for Dunelm, with the stock plunging from an opening price of £8.03 to £5.41 by mid-July. Things began to improve the other side of summer, with Dunelm spending much of October at £7.50; yet the last few months have seen the stock once again on the back foot, falling to a current trading price of £6.36.
(Source: Spreadex, 14/02/2018)
Despite its recent decline, Dunelm has 2 strong quarters under its belt. Last October the then CEO-less firm – that void was eventually filled by Nick Wilkinson in December, replacing the abruptly-departed John Browett – announced that total sales rose 24.8% to £247.9 million, with an even more impressive 9.3% jump in like-for-like sales to £214.3 million. Elsewhere the company’s acquisitions of Worldstores, Kiddicare and Achica contributed £20.7million in additional sales.
More recent was January’s second quarter update, one that wasn’t greeted with quite the same level of cheer as its October counterpart. Total sales were up 13.6% to £297.5 million, with like-for-likes rising 3.4%; the real highlight was the 30.5% surge in its like-for-like online sales to £26.2 million. However, investors were disappointed by the 180bps drop in gross margin due to lower margin sales at Worldstores and the impact of the firm’s focus on ‘newness’ in its ranges.
Back in January Dunelm also revealed that half year like-for-like sales were up 6.0%, while total sales were up 18.4% to £545.4 million. It also said that it is on track to deliver ‘good full year profit growth, after a small reduction in the first half, largely due to the consolidation of Worldstores losses’. The size of that reduction, and any comment on the current state of trading since the end of the Christmas period, will likely dictate the reaction to next week’s update.
Dunelm Group Plc (LON:DNLM) has a consensus rating of ‘Hold’ alongside an average target price of £7.01.
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