Furniture chain confirms New Zealand launch date
The company is looking to open three to four stores to meet its target of opening around 75 stores in Australia and New Zealand.
Meanwhile the retailer kicked off earnings season for the retail sector with a record net profit result, but has warned that FY18 will be “challenging”.
Net profit increased 42.4 per cent to the year ended 30 June to $37.2 million, driven by cost savings and a 15 per cent increase in sales revenue to $232.9m on four new stores in Victoria, Western Australia and Tasmania.
Like for like sales growth slowed slightly from 11.1 per cent to 10 per cent, but earnings before interest, tax, depreciation and amortisation (EBITDA) was up 38.7 per cent, underpinned by a 1.7 per cent increase in net margin and a 2.4 per cent decrease in operating expenses measured against sales.
Gross margins strengthened to 62.5 per cent from 60.8 per cent, driven by “significant volume” growth in certain product categories.
Operating expenses decreased as a percentage of sales from 41.3 per cent in FY16 to 38.9 per cent for FY17.
Volume growth and “leveraging increased revenue” from existing infrastructure were singled out as the key factors behind the improved operational performance.
However, signalling a projected slowdown in the housing market in FY18, the company told shareholders on Thursday morning that it expects same store sales growth to be “challenging” in FY18, citing uncertain trading conditions for a decision not to provide first quarter profit guidance.
Managing director Anthony Scali plans to open another ten stores across the next financial year, including the company’s first New Zealand store in December, but related earnings will only begin to be generated by FY19.
“Although our overall performance has been underpinned by the current favourable market conditions, I am pleased with the gross margin percentage increase and expense percentage decrease, which have both contributed to another record profit result,” Scali said.
Nick Scali’s Board has declared a fully franked final dividend of 20 cents per share, bringing total yearly dividends to 34 cents per share, up 11 cents on FY16.