Canaccord Genuity hails growth potential at Dunelm, keeps 'buy' rating

(Sharecast News) - Canaccord Genuity has reiterated its 'buy' rating for Dunelm following the homeware retailer's interim results this week, highlighting the company's long-term potential and strategic direction led by its new chief executive.

First-half results on Tuesday, which showed a 3.6% increase in revenues and a 6.8% fall in adjusted EBIT, were largely in line with the guidance given in January's trading update, though the surprise addition of a 25p-per-share special dividend was likely to have pleased investors.

Meanwhile, comments on early third-quarter trading are "encouraging" after relative softness in the second quarter, leaving full-year expectations unchanged, Canaccord Genuity said in a research note.

CEO Clo Moriarty, who joined in October, outlined plans to leverage Dunelm's strong brand, loyal customer base and multi-channel reach, which should "deepen engagement, enhance merchandising, and build a stronger platform for future growth", the broker added.

The stock, trading at 12.1 times FY26 earnings and 11.6 times FY27 earnings, was kept at a 'buy' with a price target of 1,280p.

"We continue to believe in DNLM's opportunity to grow share in what remains a highly fragmented homewares market. Alongside robust margins, high levels of cash generation have supported substantial shareholder returns (�1.5bn+ since IPO in 2006) and we see scope for further returns whilst operating within a disciplined capital allocation policy," the broker said.