Nick Scali shares rose on Thursday after the sofa and homewares company provided first-half profit guidance ahead of market expectations, with trading still down but steadily improving.
The retailer joined Beacon Lighting in reporting improving trading momentum in a market where shoppers have largely been shunning bigger ticket items, putting money towards the growing cost-of-living expenses.
Nick Scali CEO Anthony Scali and chairman John Ingram at the AGM on Thursday. Louie Douvis
Chief executive Anthony Scali told shareholders at the annual meeting on Thursday that group written sales orders for the first quarter to September 30 are down 5.4 per cent compared to the same period last year, or down 6.7 per cent on a like-for-like basis.
“While store traffic was down 10 to 15 per cent in the first quarter, store conversion rates improved, driven by our better value product offer for both brands,” he said.
“Final net profit after tax for the first half will depend on actual deliveries achieved before the end of December.”
Mr Scali said based on current delivery levels that net profit after tax for the first half of 2024 will be between $40 million to $42 million – topping market expectations of $38.6 million for the period.
Shares rose 2.1 per cent to $10.63 by lunchtime.
“January is a key trading month for the second half of our business, and I look forward to providing the next trading update to shareholders in February,” he said.
Citi analyst Sam Teeger has a “buy” call on the stock and said trading is still tough but has improved in the first quarter with group written sales orders down 5.4 per cent compared with an 8.1 per cent drop in July.
“We estimate this implies orders for August and September were down 4.1 per
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