Amid all the good news flying around this morning, one of the less positive stories was Dunelm.
The furnishings retailer was the biggest faller among the FTSE 250 at lunchtime, down 5.2% at 500p, after posting disappointing interim results this morning.
Nick Bubb of Arden Partners cut his rating to "reduce", and had this to say:
Dunelm is a value retailer, but it does operate in a tough segment of the non-food market, namely the furnishings sector, where the weak level of housing transactions is making life difficult. Dunelm focus on low-ticket products like cushions and curtains, but, even so, it has had some tough LFL sales comps to beat.
Given that, the surprisingly good Q1 LFL sales (13 weeks to Oct 2nd) of +2.1% led to a significant bounce in the share price, but today's Q2 news (13 weeks to Jan 1st) is surprisingly bad…with a 4.2% LFL decline meaning that H1 overall was 1.2% down LFL, leading to significant profit downgrades.
Dunelm's out-of-town superstores were hard hit by the snow disruption last month, but this was by no means the only reason for the poor Q2 sales, as it is now clear that LFL sales were negative in October and November as well.
In cheerier news, the FTSE remains above 6,000, at 6,029, and the euro is up marginally after the Portuguese prime minister said the country's finances were in better shape than feared.
