- Nick Scali has reported the seventh year in a row of rising profits for the 2019 financial year, despite a struggling housing market
- Net profit after tax (NPAT) was up just 2.8 per cent on last year, coming in at $42.1 million — the smallest increase in the past seven years
- Same store sales reflected the housing market, dropping one per cent over the year
- Nick Scali is set to open four new stores in the 2020 financial year, of which two will be in Auckland, New Zealand
- Shares in the furniture store are up 10.75 per cent to trade for $6.80 each in a $550.80 million market cap, as at 1:10pm AEST
Lounge, dining, and furniture store Nick Scali has reported the seventh year in a row of rising profits for the 2019 financial year.
However, a struggling housing market means the profit growth was the weakest of these seven years. Nick Scali’s net profit after tax (NPAT) was up just 2.8 per cent on last year, coming in at $42.1 million.
Sales revenue was up slightly higher at 6.9 per cent, bringing in $268 million for the company. These sales numbers were boosted by the opening of six new stores in 2019 — among which included Nick Scali’s second New Zealand store.
However, same store sales reflected the housing market, dropping one per cent over the year.
The second half of the financial year was when company sales dropped the most: from 10.2 per cent in the first half of the year to 3.3 per cent in the second for total sales, and 0.0 per cent to -2.2 per cent for same store sales.
Nick Scali Managing Director Anthony Scali said in general, furniture sales are directly linked to the housing market. As such, the company performed well given the state of the housing market in the 2019 financial year.
“The result was satisfactory given that furniture purchases are highly discretionary and have a strong correlation with housing sales,” Anthony said.
He explained that the value of homes has fallen over the past year, and there has been a significant slowdown in dwelling sales. This creates a “very cautious consumer”, Anthony said, and accounts for the company’s weaker year of sales.
Regardless, Nick Scali directors have announced a fully franked dividend of 20 cents per share for 2019. This bring the total dividend for the year to 45 cents per share, and is a 12.5 per cent increase on the previous financial year.
Moving forward, Nick Scali is set to open four new stores in the 2020 financial year, of which two will be in Auckland, New Zealand. This will bring the company’s total network of stores to 61 stores: 57 in Australia and four in New Zealand.
The New Zealand stores are key contenders for Nick Scali seeing sales increase this financial year, as the company says same store sales in the country are currently strong.
However, the company admitted that even with strong sales from New Zealand stores, it is very dependent on housing sales and renovations, which have been in decline. As a result of this, trading conditions for Nick Scali are likely to only improve when there is an uplift in the housing market.
Nick Scali’s continued profit despite tough market conditions boded well with the market today. Shares in the furniture store are up 10.75 per cent to trade for $6.80 each in a $550.80 million market cap, as at 1:10pm AEST.