Home furnishings retailer Dunelm Group PLC (LSE:DNLM) booked growth in both in-store and digital channels in the third quarter, though City reactions to the results were mixed.
UBS noted that “trading conditions remain volatile”, but the bank’s outlook remains unchanged after year-on-year sales in the third quarter added 3% “driven by both store and online performance”.
“Dunelm notes that there are signs that the outlook for UK consumers might be easing in some areas, but it is unclear when this might feed into a better environment for its end markets,” said UBS analysts.
They gave the stock a neutral rating with a 1,111p 12-month price target.
Dunelm conceded that the rate of year-on-year improvement is slowing as “we begin to lap the benefit of lower freight costs, whilst foreign exchange movements remain a headwind”.
Brokers at Peel Hunt analysts concurred, stating: “March proved to be a fairly challenging month, reflecting industry-wide trends. The timing of Easter did not provide any obvious boost ahead of the event (albeit in keeping with the wider sector, we sense the overall Easter weekend was positive).
“Still, both stores and digital channels delivered positive growth over the quarter, outperforming broader market declines.”
Peel Hunt pared back its second-half forecasts to bring them in line with Dunelm’s slightly lower revenue run rate but has maintained a buy rating on the stocks nonetheless.
The stock dropped 5% to 1,016 on Thursday.