Dunelm has seen its share prices skyrocket after influential analyst firm Peel Hunt raised its recommendation to “buy”.
Shares in the furniture retailer jumped 14 per cent yesterday after Peel Hunt raised its target price for the retailer to 750p, well above its current 618.5p.
Despite what Dunelm described in October as a “difficult and disappointing” year, the analyst firm said in a note to clients that a move to focus on its core values under new chief executive showed there were “clear catalysts for recovery” next year.
It added that its acquisition of Worldstores in 2016, which reportedly hindered profits by £8.4 million, was the reason behind recent downgrades.
“After a series of downgrades driven largely by the acquisition of Worldstores and the integration process, Dunelm is sharpening up its act under new chief executive Nick Wilkinson and focusing on the core values that made the business so successful in the first place,” Peel Hunt said.
For the 13 weeks to September 29, the Dunelm reported like-for-like sales growth of 4.2 per cent, including a 1.3 per cent rise in-store sales and a 33 per cent jump in online sales.
These contributed to revenue growth of £0.3 million to £248.2 million, while gross margins increased 130bps compared to the same period a year earlier.
This followed news in September that Dunelm had seen pre-tax profits drop 6.7 per cent to £102 million for the year to June 30, blaming the acquisition of WorldStores and unforgiving trading conditions for a “difficult and disappointing” year.
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