Hot summer hurts Dunelm comparable-store sales; shares fall

Wed Oct 2, 2013 4:44am EDT

(Reuters) - Homewares retailer Dunelm Group Plc (DNLM.L) reported a 5 percent fall in first-quarter like-for-like sales as fewer people visited its stores during one of Britain's hottest summers.

The company, which sells bedding, curtains, furniture and home utility items, said there was a significant decline in like-for-like sales in the first four weeks from June 30.

Total sales rose 1.7 percent to 154.3 million pounds ($250.02 million) in the quarter ended September 28.

Shares in the company fell as much as 5 percent in early trade, but recovered some of their losses to trade down 3.8 percent at 890 pence at 0837 GMT. The stock was one of the top percentage losers on the FTSE-250 Midcap Index.

Peel Hunt analyst John Stevenson said the like-for-like sales decline was worse than anticipated, but was partially offset by higher gross margins.

Gross margin for the period rose about 70 basis points from a year earlier.

"If the shares react badly to today's update, we see this as a clear buying opportunity for this well managed, high growth and cash generative retailer," Stevenson wrote in a note to clients.

Cantor Fitzgerald analyst Freddie George reiterated his "buy" recommendation on the stock saying he expects sales to recover in the second quarter.

(Reporting by Aashika Jain in Bangalore; Editing by Supriya Kurane)

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