"We are confident that we will emerge from this crisis as a stronger business ready to return to sustainable and profitable growth." Nick Wilkinson (CEO, Dunelm, 16th April 2020)
I have spent a lot of time writing about theory since I started writing my blog back in January 2020. My initial intention had been to take readers on a walk through approach and practicalities, spending a lot of time initially on psychology, then methodology. The rapid change in temperature of the Market at the back end of February 2020 caused me to change direction in my writing. I've written a lot recently about how we can respond as investors in times like these. It was always my intention to move on to application sooner rather than later. I'm now going to start applying some of the theory to real life situations.
As my first company in focus, I thought I'd look at Dunelm (LON:DNLM). I hold no position in it and I don't tip (or am qualified to do so- see my disclaimer [1] ) I write simply to educate. However I cannot deny that it is a company that has piqued my interest for some time. The drawback has however been price; it's usually been too expensive for me.
Dunlem has however been hit hard by the Market Crash. It was trading at £7 per share on 20th March 2020. It had hit £14 per share on Valentine's day, only 5 weeks before off the back of a very good report to the Market. What had happened? Well, a lot of shares got sold off heavily in the Panic and certain shares (oil producers and retailers) got hit especially hard. They were seen as the riskiest plays as the Market took a downturn and the sell-off was indiscriminate. It didn't matter how great your business was. If you were in the wrong sector demand for your shares, they slumped.
Dunelm came to my attention as it was one of those retailers that was favoured by my wife. My wife is (by her own admission) a savvy shopper and recognises the benefit of both quality and value. For homewares and furnishings Dunelm rapidly became her number one choice at the expense of the older players (the Department Stores) and the new pretenders (Supermarkets etc.) Only John Lewis came close…
