Value homewares group Dunelm posted a better than expected third quarter, when sales rose 9.4% to £139m.
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Although like-for-likes fell 1.3% the period to April 2, gross margin advanced 150 basis points, thanks to Dunelm’s ability to pass higher costs on to consumers and keen management of the January Sale.
FinnCap, advising buy, said: “Dunelm is not a cheap share, at least not on our low-field forecasts. But neither should it be. The company has ample scope to roll out its successful format into many more locations, providing above-sector growth for several years.”
Peel Hunt, also a buyer, said: “With few retailers able to deliver ongoing earnings growth related to new space, gross margin expansion and rising cash balances, we continue to view any sector weakness or downside in Dunelm’s share price as an excellent buying opportunity.”