Dunelm shares gained 3.6% on Thursday after Deutsche Bank upgraded the homewares retailer to Buy from Hold, citing improved profit forecasts and store growth plans.
The stock rose to 861.78 pence by 08:57 BST, extending gains from its September 2 close of 832 pence. Year-to-date, Dunelm remains down about 25%, underperforming the FTSE 350 Retail Index by roughly 30%.
Deutsche Bank raised its price target to 1,050 pence from 850 pence, implying a 25% upside to the latest closing price. The bank also lifted its fiscal 2027 profit-before-tax forecast by 4% to £219 million, up from £210 million previously. Sales growth is expected to accelerate to about 4% in fiscal 2027, supported by both like-for-like gains and new store openings.
The upgrade follows Deutsche Bank’s view that Dunelm is well-positioned to expand its market share in the UK homewares sector. The retailer aims to reach 10% market share, up from 7.9% in fiscal 2025. Deutsche Bank forecasts nine new store openings in fiscal 2027, compared with three in fiscal 2026.
The bank noted that approximately 60% of Dunelm’s estate has not been refitted since before the pandemic, while around 10% may require major refurbishment. The retailer’s new mobile app, launched in February, is expected to support future growth.
Dunelm is scheduled to provide an updated strategy outlook on September 8, which may further clarify its expansion and refit plans.
The FTSE 250 edged higher in early trade after slipping 0.8% in the prior session, reflecting cautious optimism in UK retail sentiment.
