Record profits for Nick Scali, but retailer warns of slide in orders

afr.com:

Nick Scali has posted a record profit in the 12 months to June 30, helped by a double digits sales and earnings growth, but the furniture retailer is warning that consumer sentiment has “deteriorated” and orders are falling.

Sales for the 12-month period rose 15.1 per cent to $507.7 million, pushing net profit after tax to $101.1 million, the company told shareholders. It said the double-digit gain in top-line sales was underpinned by increased deliveries, helping to reduce the order book wait time.

Nick Scali furniture CEO Anthony Scali. Louie Douvis

The year also was boosted by 12 months of revenue contribution from Plush-Think Sofas, which Nick Scali acquired in November 2021.

“Trading during the year has been variable and challenging, as consumer sentiment deteriorated in line with interest rate increases,” said the company’s chief executive, Anthony Scali.

Statutory net profit after tax (NPAT) rose 34.9 per cent to $101.1 million, ahead of market expectations of $96.3 million. Underlying NPAT climbed 4.6 per cent. Group earnings before interest and taxes reached $154.3 million, a 23.8 per cent gain on the year before. The purchase of Plush also helped expand profit margins, the company added in a statement.

Nick Scali flagged a final dividend of 35¢ per share, in line with a year ago, and to be paid on October 18.

However, sales orders in the six months to June 30 were down 16.2 per cent on the prior period. The company said trading was “very volatile” over the half, although improved in June, when written sales orders totalled $51.5 million – up 4.5 per cent on the prior year. In July, orders fell 8.1 per cent from strong sales in July last year to $39.7 million.

There are 64 Nick Scali stores and 43 Plush stores