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Dunelm is the biggest loser in the FTSE 250 this morning after the UK homewares retailer announced a significant drop in profits.
Shares in Dunelm plunged 10 per cent to a three-year low on Wednesday morning after the mid-cap company said profit before tax fell 26 per cent in the last six months of 2016 compared to the same period the previous year, to £55.9m.
Profit before tax was down just 11.3 per cent when excluding costs associated with its purchase of Kiddicare owner Worldstores at the end of last year.
The retailer said trading had been softer than expected while a disruption in its supply chain also affected its performance over the period.
An 8.3 per cent rise in the dividend as well as increased market share over the period did not lift investors’ spirits, however, with shares hitting a low of 610p shortly after the market opened.
Analysts at Cantor Fitzgerald said they still rated the stock as a buy, writing in a note:
Our positive view is predicated on confidence in the company’s management, the strategy and the brand. Dunelm offers a rare combination of space expansion and multi-channel growth coupled with strong cash generation and a market leading position in the UK homewares market.
John Browett, chief executive officer, said that Dunelm was in a “transitional year”, with five new stores opening in the half and a further five forecast for the remainder of the year.