Nick Scali shares rally as HY profit outstrips estimates
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More news: Nick Scali shares jumped on the ASX after the furniture retailer's first-half profit came in 15% ahead of market estimates, despite retreating 30% year on year.
Nick Scali shares were up 13.1% to $18.42 by midday AEDT, extending gains of more than 20% over the last month.
Citi said that Nick Scali's first-half gross margin in both its Australia and UK business beat consensus forecasts. The company also declared a dividend of 30 cents per share, beating expectations of 24.2 cents per share.
What they said: "We think the market is likely to look through softening top line ANZ trends, given the broader medium term macro outlook appears to be improving," said Citi analysts.
"The bigger issue from our perspective is how we should think about the ANZ store rollout, which appears weaker than expected again."
"There are positive signals coming out of the UK that reflect strong execution, but this is a small part of the business at this point in time."
Nick Scali profit sinks as 'volatile' trading hits sales
The news: Nick Scali reported a 30% decline in first-half net profit after tax, as the furniture retailer warned that "volatile" trading continues to impact new store openings.
The numbers: Nick Scali reported statutory NPAT of $30 million for the six months to December, down 30.2% compared to the previous corresponding period.
In its primary Australia and New Zealand business, underlying NPAT lowered 16.3% year over year to $36 million, topping guidance of $30 million to $33 million. Statutory NPAT in this segment fell 20.7% to $34.1 million.
ANZ group revenue for the period was $222.5 million, down 1.8% year over year, as written sale orders for the period shrank 2.2% to $208.1 million.
The company declared a fully franked interim dividend of 30 cents per share, trimmed 14.3% from 35 cents per share a year ago.
Nick Scali's UK business posted an underlying net loss after tax of $2.8 million, beating its loss guidance of $3.3 million to $3.8 million. It saw a statutory UK net loss after tax of $4.1 million, compared to a loss of $5.1 million to $5.9 million previously guided.
The group said the UK written sale orders of $19.4 million were "significantly impacted" during the period from disruption caused by stores being closed for refurbishment.
The context: Nick Scali said that "trading continues to be volatile" moving into the second half of the year. While one new ANZ store will open in the second half, further planned store openings have been delayed to the next financial year.
In the UK, Nick Scali expects "further disruption" and an "increase to operating losses" in the second half, with eight more stores set to be refurbished and rebranded.
The source: ASX announcement
