These were disappointing half-year figures from Dunelm (DNLM), reflected in an 8 per cent fall in underlying profits. This was worse than analysts’ expectations, but largely the result of the recent Worldstores acquisition taking longer to integrate than first thought. Indeed, what Dunelm calls its “core business” is holding up well in a difficult market, with like-for-like sales up 3.5 per cent in its stores segment, and an even stronger performance from Dunelm.com, which recorded 37 per cent sales growth. But the consolidation of trading losses across the Worldstores business is proving to be a drag on the wider group. Cash profits fell 2 per cent year on year to £79.1m.
Crucially, analysts at Peel Hunt say they can “no longer assume the elimination of Worldstores losses” which has resulted in forecast downgrades for the current financial year and beyond. The broker has reduced its adjusted pre-tax profit estimate by £3m to £118m for the year ending June 2018, giving EPS of 45.4p, compared with £109m and 42.9p in FY2017.
It’s also been announced that chief financial officer Keith Down is leaving the business for “personal reasons”. His predecessor David Stead will reassume the role on an interim basis until a replacement is found.
| DUNELM (DNLM) | ||||
| ORD PRICE: | 592p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 591-593p | 12-MONTH HIGH: | 760p | LOW: 542p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 57p* | NET DEBT: | 118% | |
| Half-year to 30 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 461 | 55.9 | 21.9 | 6.5 |
| 2017 | 545 | 56.3 | 22.3 | 7.0 |
| % change | +18 | +1 | +2 | +8 |
| Ex-div: | 22 Mar | |||
| Payment: | 13 Apr | |||
| *Includes intangible assets of £28.4m, or 14p a share | ||||
