Nick Scali Limited - Annual Results Announcement for FY24
NCK (NCK) Share Update August 2024 Thursday 8th
Nick Scali Limited Reports Decrease in Annual Revenue and Profit
Nick Scali Limited (ASX: NCK), a leading furniture retailer, has reported its financial results for the year ending 30 June 2024. The company experienced a noticeable decline in both revenue and net profit, reflecting challenging market conditions and strategic investments.
Instant Summary:
- Revenue decreased by 7.8% to $468.2 million.
- Net profit after tax (NPAT) fell by 20.3% to $80.6 million.
- Basic earnings per share (EPS) dropped by 20.9% to 98.7 cents.
- Final dividend per share decreased by 5.7% to 33 cents.
- Total dividends per share fell by 9.3% to 68 cents.
- ANZ written sales orders increased by 2.4% to $447.4 million.
- Gross margin improved by 2.0% to 65.6%.
- UK acquisition of Fabb Furniture completed in May 2024.
- Cash and bank deposits stood at $111.3 million at the end of June 2024.
Financial Performance
Nick Scali Limited reported a revenue of $468.2 million for FY24, marking a 7.8% decline from the previous year. The net profit after tax (NPAT) also saw a significant drop of 20.3%, amounting to $80.6 million. Basic earnings per share (EPS) fell by 20.9% to 98.7 cents.
The company's gross margin, however, improved by 2.0%, reaching 65.6%. This improvement was driven by a better performance in the Australian and New Zealand (ANZ) markets, where the gross margin increased by 2.5% to 66.0%.
Dividend and Cash Position
Nick Scali declared a final dividend of 33 cents per share, fully franked, which is a 5.7% decrease from the previous year. The total dividends per share for FY24 amounted to 68 cents, down 9.3% from FY23. The company's cash and bank deposits at the end of June 2024 were $111.3 million.
Operational Highlights
The company completed the acquisition of UK furniture retailer Anglia Home Furnishings Limited, trading as Fabb Furniture, on 8 May 2024. This acquisition added $6.8 million in written sales orders from the UK to the group's total of $454.2 million for the year.
In the ANZ region, written sales orders increased by 2.4% to $447.4 million. The fourth quarter of FY24 saw a 4.8% increase in written sales orders compared to the same period last year, benefiting from five weekends in June.
Store Network and Online Sales
Nick Scali expanded its store network by adding three new Plush stores in Australia and acquiring 20 UK stores through the Fabb Furniture acquisition. The company also reported a 17.8% increase in online sales orders, reaching $34.8 million for FY24.
Outlook
The company expects to open two new Nick Scali stores and three to five new Plush stores in FY25. However, the UK market is expected to face tougher conditions and disruptions due to store refurbishments and changes in the product range.
The decline in revenue and net profit is likely to impact Nick Scali's stock price negatively. However, the improved gross margin and strategic acquisition in the UK could provide long-term growth opportunities. Investors may react cautiously to the mixed financial results and the company's future outlook.
Investor Reaction:
Analysts are likely to have mixed reactions to Nick Scali's results. While the decline in revenue and profit is concerning, the improved gross margin and strategic expansion into the UK market could be seen as positive steps for future growth. Investors may adopt a wait-and-see approach as the company navigates through these changes.
Conclusion:
Investors should keep an eye on Nick Scali's performance in the coming quarters, particularly in the UK market. The company's strategic initiatives and expansion plans could provide growth opportunities, but the current financial results highlight the challenges ahead. Staying informed on the company's developments will be crucial for making informed investment decisions.