Nick Scali FY24 Financial Results and UK Expansion Strategy
NCK (NCK) Share Update August 2024 Thursday 8th
Nick Scali Announces FY24 Financial Results and UK Expansion
Nick Scali Limited (ASX: NCK) has released its financial results for FY24, highlighting significant developments including a UK acquisition and expansion plans.
Instant Summary:
- ANZ written sales orders increased by 2.4% to $447.4 million.
- Group underlying profit after tax was $82.1 million.
- UK acquisition of Fabb Furniture completed on 8 May 2024.
- Group revenue for FY24 was $468.2 million, a 7.8% decrease from FY23.
- Final dividend of 33 cents per share, bringing the full-year dividend to 68 cents per share.
Financial Performance
Nick Scali reported a group revenue of $468.2 million for FY24, which represents a 7.8% decline compared to FY23. The decline in revenue is attributed to the normalization of delivery lead times post-COVID-19, which had previously boosted FY23 revenue.
The company's underlying profit after tax was $82.1 million, excluding $1.5 million in transaction costs related to the UK acquisition of Fabb Furniture. The acquisition was completed on 8 May 2024, and its results have been included in the group results since then.
Sales and Margins
ANZ written sales orders increased by 2.4% to $447.4 million, with a gross margin of 66.0%, up 2.5% from FY23. The UK contributed $8.1 million in written sales orders since the acquisition.
Group written sales orders for FY24 were $454.2 million, a 3.9% increase from FY23. The ANZ region saw a 1.0% increase in like-for-like written sales orders.
UK Expansion
The acquisition of Fabb Furniture marks Nick Scali's entry into the UK market. The company plans to support the UK management team through the integration and rebranding process, grow the team, and transition stores to carry Nick Scali products.
Nick Scali aims to refurbish and rebrand existing stores, optimize the store network, and expand it in the long term. The first sofa and dining range for the UK market is expected to arrive in showrooms by September 2024.
Cash Flow and Dividends
Nick Scali ended FY24 with $111.3 million in cash and bank deposits. The company repaid $20 million in corporate acquisition debt, reducing the outstanding balance to $28 million. A final dividend of 33 cents per share was declared, bringing the full-year dividend to 68 cents per share.
The financial results indicate steady growth in the ANZ market and a strategic move into the UK market. The increase in gross margin and written sales orders in ANZ is a positive sign. However, the decline in overall revenue may concern some investors. The UK expansion presents both opportunities and risks, as the company navigates integration challenges and market conditions.
Investor Reaction:
Analysts are likely to have mixed reactions. The positive growth in ANZ sales and margins is encouraging, but the overall revenue decline and the challenges of the UK expansion could temper enthusiasm. The final dividend may help maintain investor confidence.
Conclusion:
Investors should keep an eye on Nick Scali's progress in the UK market and its ability to maintain growth in ANZ. The company's strategic initiatives and financial health suggest potential for long-term growth. Staying informed on the company's developments will be crucial for making informed investment decisions.