Broker snap: Nomura impressed with Dunelm's store growth

5th Oct 2011 09:58

Nomura has kept its buy rating and 530p target price on homewares retailer Dunelm, saying that despite weakness in the macro environment, the firm's space growth strategy on track.Dunelm reported on Wednesday that first quarter sales had fallen 2% on a like-for-like (LFL) basis, in line with the British Retail Consortium category data in the period, "although towards the end of the period, it appears Dunelm began to outperform its peers," Nomura notes.Despite the LFL decline, the group said that a 7.3% contribution from new space drove total sales up by 5.3%."Dunelm continues to offer one of the few organic growth stories in UK retail, with high return on invested capital and double-digit earnings growth. Despite its, in our view, premium valuation, we see this as a strong long-term story in UK retail," the broker said.By 09:57, shares were trading 2.48% lower at 471p.BC