Is there any way Dunelm can escape more retail gloom with Wednesday’s full year results?
It’s not hard to guess what the company’s chart would look like in 2018. From an opening price of £7.05, the stock tumbled all the way to a 6 year-plus low of £4.64 by mid-July, and hasn’t been able to post much of a recovery since then, climbing back to a current trading price of £5.20.
The FTSE 250 firm released a fairly substantial update back in July, and things didn’t look good. For the fourth quarter like-for-like store sales plunged fell 4.6%, countered by a 41.8% surge in online LFLs. And while this left Q4 total like-for-likes up 0.1%, total group revenue fell 1.4% to £236.5 million.
For the 52 weeks to the end of June, the picture was far more positive. Comparable store sales rose 1%, while online they were up 37.9%, leading to a 4.2% increase in total like-for-likes and a 9.9% jump in revenue to £1.05 billion.
However, whatever goodwill generated by those full year figures was quickly spoilt by the fact it now expects pre-tax profit, before exceptional items, to come in at £102 million, below both the £109.3 million posted in 2017 and the £106 million expected by analysts. That disappointment came after the company said it took a £3 million hit as it struggled to sell discounted products over summer.
If Dunelm wants to avoid a further fall, or even start to recover, then it needs to avoid that pre-tax profit figure dropping under £102 million. Any word on current trading will also be welcome – then again, given recent word from the UK retail sector, maybe it wouldn’t.
Dunelm Group Plc (LON:DNLM) has a consensus rating of ‘Hold’ alongside an average target price of £5.84.
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