Dunelm Group PLC (LON:DNLM) was the biggest FTSE 250 faller today as brokers Jefferies International and Peel Hunt both cut their ratings for the homewares retailer after yesterday’s Christmas trading upate.
In late morning trading, Dunelm shares were down over 4%, or 31.5p at 710.5p.
In a note to clients this morning, Peel Hunt downgraded their stance on Dunelm to ‘hold’ from ‘buy’ and chopped their share price target to 800p from 1,000p after cutting estimates.
They said: “Q2 sales came in £13m or 5% below our forecasts, largely down to store sales, of which £4m relates to the timing of the post-Christmas sale (two days are pushed into Q3).”
The analysts added: “We prudently cut our 2017FY underlying PBT forecast by £9m, reflecting lower LFL assumptions, coupled with an £8m loss for the WS (Worldstore) acquisition. We also downgrade our recommendation to Hold until we see evidence of revenue drivers.”
Analysts at Jefferies downgraded their stance on Dunelm to 'underperform' from 'hold' and cut their price target for the shares to 650p from 700p.
The analysts said Dunelm's second-quarter Christmas trading performance was actually a relief following a disappointing first quarter.
But, they added, with rising UK inflation, they believe the company's strategy will only go so far to offset real disposable income declines.