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Dunelm (DNLM) – Interims PTP: £27.2m (£21.9m) Divi 2p (0.8p)

The Leicestershire-based retailer has managed the decline in consumer confidence much more successfully than many of its rivals. The improvement in profitability was due to stronger underlying sales, up 4.9%, and better gross margins which improved by 80 basis points.

The group, which was recently voted the third favourite retailer, has increased its share of the homeware market to 3.8% compared with 2% five years ago. During the first half the company opened five new superstores and will open another three in the second half. The aim is to grow by a further 68% to 150 stores. Agreements have been signed for four sites next year. There is a ‘healthy pipeline of potential new sites’.

Joint broker Landsbanki is forecasting EPS of 15.4p, rising to 17.9p next year, placing the shares on a PE of 9.4, falling to about eight.

Shares says: An undemanding rating makes the shares attractive.

by: John Marshall