Dunelm Group saw its share price slump over 8% in mid-morning trading to 587.25 following a mixed set of interim results.
The FTSE 250-listed homewares retailer saw its full-year pre-tax profit fall to £60m, down from £65.2m a year earlier, although like-for-like sales rose by 6% to £469m
The fall in share price reflected a squeeze on margins and the fact that its chief financial officer is to quit.
New CFO sought
In a separate statement, Dunelm announced the departure of its chief financial officer Keith Down, confirming he will step down in June.
The company said the search for Down’s successor is underway, and his predecessor David Stead has agreed to become interim CFO during any transitional period, in the event that the new appointee is unable to start before Down leaves.
Stead was CFO of Dunelm Group from September 2003 until his retirement from that role in December 2015.
Commenting on the latest results, Neil Wilson, senior market analyst at ETX Capital said it was increasingly clear that Dunelm's margins were taking a battering as it sought to maintain sales growth and market share.
He added: "It’s proving to be a very tough market out there –we’ve seen several retailers in the sector fail in recent months and margins are coming under pressure across the board. Consumer spending is softer of course, but the decline in property market activity is key – the less people move home the less they spend on new furnishings."
Margins hit hard
Wilson concluded: "In the first half, as was pretty well flagged in the last two updates, revenues grew well but margins are taking a beating thanks to the inclusion of sales from the lower margin Worldstores as well some heavy discounting."
Dunelm reported that interim dividend increased by 7.7% to 7p per share (FY17: 6.5 p per share).
Andy Harrison, Dunelm Chairman, commented on the latest figures: "Our gross margin in the first half was lower due to the mix effect of acquired Worldstores sales and a higher proportion of end of season and seasonal products.
"We expect a more stable margin performance in the second half, which, together with reduced losses and increased integration benefits from the acquisition, should deliver good full year profit growth.
"The Board has increased the interim dividend by 7.7% to 7 p per share, reflecting both Dunelm's future profit growth potential and our strong cash generating capability."