Dunelm Group plc (LON:DNLM) was downgraded to ‘sector perform’ from ‘outperform’ by RBC as analysts expect pressure on store retailers after the coronavirus crisis.
Analysts raised the price target to 950p from 900p after shares rallied recently following the reopening of online operations.
READ: Dunelm posts “significantly higher” order levels after reopening online shop
RBC Capital Markets said the online platform is providing some offset to store sales and is performing well, however there are delays in deliveries.
Dunelm is expected to suffer from weaker consumer confidence once the coronavirus pandemic is resolved, alongside the wider UK homewares market.
“We think footfall will only recover gradually in stores and margins are likely to be constrained as a result of lower sales densities,” analysts commented.
“Dunelm is a well-managed, cash generative business, with ample liquidity, a strong range advantage and less seasonal inventory risk compared with some of the apparel names.”
Shares dipped 1% to 862.08p on Monday late morning.