Business Overview
Dunelm Group plc (LON: DNLM) is a homewares company based in the UK. DNLM is a general retailer company and provides a range of products to its customer, in the name of its brand-Dunelm. The company's online store has approximately 24,000 products with around 170 superstores and two high street stores.

Recent News
On 5^th December 2019, the company announced its trading update. The company will announce a more comprehensive trading update on 9 January 2020. 

Trading Update (5^th December 2019)
The company said that the customers had responded well to the new website. The company has delivered a strong sales growth in both the online and in stores. The company’s gross margins had been in line with the expectations. Operational costs of the company would remain well controlled. The company had anticipated that the full-year profit before tax would be higher due to an increase in the demand of its customers.

Financial Highlights – Q1 Financial year 2020 (28^th September 2019, GBP, million)

(Source: Interim Report, Company Website)

In the first quarter of the financial year 2020, the company’s total LFL sales grew by 6.4 per cent to GBP 255.6 million due to the decentgrowth recorded across the total retail system. Overall, the Dunelm’s revenue growth was at 7.5% due to the benefit of new stores. Total Group’s revenue increased by 5.8 per cent due to continued gain in market share.
Share Price Performance
 

Daily Chart as on 6^thDecember 2019, before the market closed (Source: Thomson Reuters)

On December 6^th, 2019, Dunelm Group Plc shares were trading at GBX 1,012 at the time of writing before the market close (at 12:15 PM GMT), up by 1.62 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 1,038/GBX 464.60. The stock has given a 72 per cent return in the last year, and now some correction in the stock price is expected.

Valuation Methodology


Conclusion
The company has delivered a strong financial performance in the first quarter of the fiscal year 2020. The company’s gross margins have performed better than expected due to the sourcing gains. The company’s operational costs are in control and in line with expectations. The company faces certain principal risks and uncertainties, which could impact its overall performance.Failure to respond to changing consumer needs could affect the revenue of the company. Failure to deliver proper products timely to its customers could hamper the reputation of the company. Failure to anticipate the regulatory impact of climate change could affect the operations of the company. Brexit could impact sales and margin of the company due to a downturn in consumer demand. Failure in Cybersecurity could affect the operations of the company.

Based on the valuation and factors as highlighted above, we recommend our investors to keep a “Watch” on the stock at the current price of GBX 1,030 (as on 6^th December 2019, before the market close at 3.00 PM GMT), with support from few catalysts needs to be evaluated at a later stage.  
 
*All forecasted figures and information have been taken from Thomson Reuters.

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