Broker snap: Forecasts lowered at Dunelm

7th Apr 2011 10:42

Nomura keeps its 'buy' rating on Dunelm given its growth potential, but tweaks down forecasts as it foresees weaker-than-expected sales trends.The homeware retailer reported a disappointing second quarter (October to December) with like-for-like (LfL) sales down 4.2%, against a tough comparative of a 11.6% LfL increase."For the third quarter Dunelm faces a +7.1% (adjusted) LfL comparative, easier than the second quarter but with increased macro headwinds. We therefore forecast -3.5% LfL for the third quarter," said analyst Christopher Walker.The Japanese broker cuts its full-year LfL sales estimates from flat to -1.5%, and reduces 2010/11 and 2011/12 pre-tax profit forecasts by 5.3% and 8.7%, respectively.The target price is cut to 530p, from 550p. ---bc