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Investing.com -- Shares of Dunelm Group plc (LON:DNLM) rose more than 3% on Thursday after the company posted stronger-than-expected fourth-quarter revenue and full-year gross margin figures,
Fourth-quarter revenue grew 4.2% year-over-year to £415.6 million, above Barclays’ estimate of £407.2 million.
Full-year revenue reached £1.77 billion, topping the Bloomberg consensus of £1.767 billion and company-compiled consensus of £1.764 billion.
The company attributed the growth to higher volumes, noting that pricing remained broadly stable.
Gross margin for the year improved by 60 basis points to 52.4%, up from 51.8% in fiscal 2024.
The company cited strong full-price sales, limited discounting and solid sell-through of seasonal ranges.
This was ahead of prior guidance of 51.5% to 52%. As a result, Barclays (LON:BARC) raised its gross profit estimate for the year by 1.7% to £927.3 million.
Pre-tax profit for fiscal 2025 is expected to be £210 million, in line with company-compiled consensus.
Barclays lifted its profit forecast by 0.3%, reflecting increased operating expenses and a £14 million share buyback related to employee share awards.
Digital sales accounted for 42% of total sales in the fourth quarter, up from 40% a year earlier.
The company flagged enhancements to the online experience, including AI-driven search and product recommendations.
Digital revenue rose 9.4% to £174.6 million, while non-digital sales increased 0.7% to £241 million.
Barclays made minimal changes to fiscal 2026 and 2027 forecasts. Gross margin assumptions were raised based on current performance, while higher operating costs were also factored in.
The bank’s pre-tax profit forecasts for fiscal 2026 and 2027 now stand at £216.8 million and £226.2 million, slightly below Bloomberg consensus by 1.7% and 2.0%, respectively.
Full-year adjusted diluted earnings per share rose to an estimated 76.6p from 74.4p in fiscal 2024.
Free cash flow to equity was projected at £127.3 million for the year. The company maintained a dividend of 45.7p per share.
Dunelm’s share price closed at 1,141p on July 16. Barclays maintained its “overweight” rating and 1,300p price target, citing a fiscal 2025 free cash flow yield of around 6%, excluding freehold purchases.
No formal guidance was provided for fiscal 2026. The company said it had yet to see signs of consumer recovery and acknowledged upcoming National Insurance cost pressures.