Dunelm, the homewares retailer, has fallen sharply after news that former chief executive Will Adderley is cashing in around £25m worth of shares in the business.
Adderley, the son of the company's founder who remains executive deputy chairman, and his wife plan to sell around 5m shares in a placing managed by UBS. The shares represent around 2.5% of Dunelm's share capital. Adderley told the company the move was to diversify his share portfolio, and he agreed not to sell more shares for at least six months. His remaining stake gives him around 32.4% of the company, while the Adderley family in total retain 56.2%.
The news has sent Dunelm shares down 28.5p to 480p, a 5.6% drop which makes it the biggest faller in the FTSE 250. Analyst Nick Bubb said:
Will Adderley, who stepped back from day-to-day involvement in the business when Nick Wharton was brought in from Halfords to take over as chief executive, is to sell 5m more shares as part of a "portfolio diversification". Given the recent strength of the share price and the outlook for the UK economy, cynics will think that the real reason is rather different, but, to be fair, the Dunelm business model, of selling cheap cushions and curtains to the mass market, is highly profitable and given the store roll-out potential there should be plenty of takers for the placing.
A month ago the company reported a near 8% rise in half year profits to £52m, and Panmure Gordon said:
As management near the end of their interim results roadshow, we would presume that the bookrunners will have in principle placed the shares already. Our view on the stock is unchanged as a result of this news, and we reiterate our buy recommendation and 600p price target.
Update 11.55
Dunhelm has just announced Adderley and his wife have in fact sold 7.5m worth of shares at 480p each, raising £36m between them. This leaves Adderley with a 31.2% stake in the business.
