- Dunelm Group
- 17 January 2025 10:01:29
Source: Sharecast
Dunelm's share price dropped 6% on Thursday after the retailer revealed that sales grew by just 1.6% year-on-year over the second quarter, well below the 5% expected by the market despite "relatively easy" a prior-year comparative of 1%, Berenberg said.
"The company faced particularly volatile trading conditions, not just week-to-week, but intraweek, which likely reflected nervousness about the economy and employment prospects among consumers," the broker said.
However, Berenberg said there was "pleasingly little damage to estimates", with the company remaining comfortable with existing pre-tax profit consensus forecast range of £208m-218m for the full year.
"We continue to like this relatively defensive retailer, which can drive sales through attractive prices and product, and pursue growth via new space and online, while maintaining strong margins, ROIC, FCF and an attractive dividend," the broker said.
Shares trade at just 13 times current-year earnings, which the broker said "looks undemanding [...] for the combination of quality, defence and ongoing moderate growth potential".
The stock was bouncing back 0.8% to 976p on Friday morning, with Berenberg still predicting major upside with a 1,430p target price.