Canaccord reiterates 'hold' rating for Dunelm

10th Feb 2016 10:23

(ShareCast News) - Canaccord Genuity has reiterated its 'hold' rating for Dunelm Group after the homewares retailer declared a special dividend and reported a solid first half.For the 26 weeks to 2 January, the FTSE 250 list company lifted sales 10.3% to £448.1m, with store like-for-like (LFL) sales up 3.4%, though numbers were boosted by an extra six days of winter sale in the recent calendar.LFL sales growth was driven by a strong performance from curtains and bedding, particularly the new Kids range.With gross margins improving slightly, profits before tax rose 10.7% to £75.5m, while earnings per share grew 11% to 29.3p.Cash generation continued to be strong and as well as the interim dividend being increased by 9.1% to 6.0p per share, a special distribution of 31.5p per share was announced, which will cost £64m and be payable to shareholders."These results represent another solid set of results from a quality company," Canaccord Genuity said.The broker said given new chief executive John Browett's track record at Dixons Retail for "driving sales and profit densities and improving customer service, we would expect nothing less from him in pursuing and driving Dunelm's growth for the longer term".The target price was left unchanged at 910p.Shares rose 7.85% to 889.75p at 1111 GMT.