Dunelm Group PLC (LSE:DNLM) shares tumbled 17% as the retailer warned on profits after reporting slower sales growth for the past quarter.
The FTSE 250-listed homewares chain reported a 3.6% increase in total sales to £926 million for the first half of its financial year, with quarterly sales growth slowing from 6.2% in the September quarter to 1.6% in the three months to 27 December amid a competitive retail environment.
Profit before tax for the first half is now expected to be between £112 million and £114 million, with full-year profit now forecast to be at the lower end of market expectations.
City analysts have on average forecast full-year PBT of £222 million, with a range of £214-227 million.
Chief executive Clo Moriarty called it "a solid first half", with the performance reflecting "a strong first quarter followed by a more challenging close to the half".
Trading was more challenging around Black Friday and continuing into December, with a "high level" of competitive activity shown via digital marketing and discounting.
She added: "Whilst the UK retail environment remains variable, we have acted on some clear lessons from the first half, including targeted steps to improve availability, ensuring customers can access our fantastic ranges seamlessly, however they are shopping with us."
Sales growth in the second quarter saw the furniture segment affected by availability issues. Dunelm said recovery plans are in place.
The group continued to invest in its store estate, opening a new store in Wandsworth and reopening its Yeovil site following a fire. A full customer launch of its new mobile app is expected in February.
Shares fell 200p in early trading to 970.5p, their lowest since April last year.
Analysts at Barclays said growth was below its Q2 estimate, with the growth rate of 1.6% slower than Q1 despite a relatively soft comparative from the previous year.
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