As expected, Dunelm shares didn’t have the best 2018. Starting at £6.92, they found themselves lurking around a 6-year nadir of £4.75 over summer, before climbing back to £6.25 by early December. Any second half momentum was lost by the end of the year, however, with the stock closing out at £5.41.
Yet since 2019 has gotten underway the retailer has been on a right tear. Lifted by an excellent second quarter update – more on that in a sec – Dunelm shares have climbed all the way to a current trading price of £7.29, only a smidge off the end of January’s 15 month peak of £7.33.
That Q2 statement in early January, covering the 13-week period to 29th December, saw Dunelm post a huge 9% surge in like-for-like sales, with a 5.7% rise in comparable store revenue paired with a 37.9% increase online. Combine that with a solid Q1, and half year like-for-likes rose 6.9%, alongside an admittedly less impressive 1.2% jump in total group revenue to £551.8 million.
It now expects pre-tax profit for the first half to be around £70 million, after taking an impairment charge of £3.8 million related to the Fogarty brand, against 2018’s £60 million before exceptional items.
The company was coyer when it came to discussing its full year outlook, stating that ‘given the unprecedented levels of uncertainty facing consumer and businesses in the UK’ it remains cautious. Dunelm went on to claim that ‘if the homeware market continues to grow at a similar rate’ to that see in H1, then pre-tax profit should be ‘modestly ahead’ of the £108 million to £112 million currently forecast by analysts. Any further clarity on this issue could be the key driver of trading following Tuesday’s update.
Dunelm shares have a consensus rating of ‘Hold’ alongside an average target price of £6.15.
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