Dunelm shares slump after Iran war profit warning
Shares in Dunelm have slumped after the homeware and furniture store warned its profits could dip as the Iran war damages consumer confidence.
The FTSE 250 firm’s share price fell as much as 7.9 per cent on Thursday, to 789p, leaving the stock down more than 26 per cent in the year so far.
The Iran war has spiked fears that inflation could ravage the UK’s economy, and multiple retailers have warned these concerns could dampen consumer spending.
The homeware store said: “Global events have resulted in a more uncertain external environment, and we are not assuming any immediate improvement to consumer confidence.”
Dunelm reported 2.1 per cent sales growth to £472m in the three months to the end of March, as total sales are up 3.1 per cent to £1.4bn in the year so far.
The company said it is confident it can “deliver a compelling proposition to customers” but said its pre-tax profit for the full year will be at the lower end of analyst’s expectations.
New Dunelm boss eyes expansion
Dunelm said the pre-tax profit forecast consensus among brokers is £213m – within a range of £210 to £217m – and it expects to be “towards the lower end” of this range.
“We remain very confident in our ability to control the controllables, and in our long-term growth prospects; we have a strong set of assets, all of which present further opportunities,” the firm said.
The Leicester-based business holds a 7.9 per cent market share and is eyeing expansions under new boss Clo Moriarty, who joined the firm from Sainsbury’s last year.
Dunelm’s share price fell by more than a fifth at the start of the year after it missed its Christmas sales target, despite reporting strong sales in the six months to the end of January.
‘Fundamental’ issues beyond Iran war
Stock broker Panmure Liberum said the January update may turn out not to be a simple “blip,” with Thursday’s results pointing towards “fundamental” issues at the firm.
Analyst Ben Hunt said: “While bulls may point to the conflict in Iran and the broader uncertain trading environment, we suspect the slowdown is more fundamental.
“In particular, the commentary around gross margin softness is concerning.”
Mark Crouch, market analyst at eToro, said: “Dunelm still looks well-positioned for now, […] but the mood music has shifted.
“What began the year as a fairly benign backdrop has become more unsettled, and investors have noticed. Dunelm shares have struggled to gain traction, with sentiment dampened by a combination of cautious guidance and geopolitical escalation.”