Fantastic Furniture has overcome depressed trading conditions to post a record $13.2 million first half profit as customers snap up low cost furnishings.
Fantastic Holdings Ltd on Tuesday said it would open another four or five stores in the second half after net profit rose 35 per cent in the six months to December 25, 2011, up from $9.8 million in the prior corresponding period.
Managing director Julian Tertini said the group, which owns the Fantastic Furniture brand, was confident of delivering profit and sales growth for the full year despite challenging trading conditions in the retail sector.
"It is encouraging to see January and early February sales being more positive, trading ahead of the corresponding period in 2011. However, we still see overall trading conditions as challenging in the near future," Mr Tertini said.
Fantastic Holdings was in a sound position compared to other retailers in the current environment," Mr Tertini said.
The group said the main driver of its first half profit result was an improvement in gross margins, which lifted to 48.6 per cent from 46.2 per cent.
Sales revenue rose 3.4 per cent to $227.6 million, from $220.6 million.
Chief executive Mark Garwood said supply chain efficiencies and a focus on quality had helped improve margins.
"Rather than continue to drop prices we put a lot of effort into improving the quality of product," Mr Garwood said.
The company predicts small furniture chains could become casualties this year after Sleep City went into administration in 2012.
Fantastic opened four new outlets during the half year, taking the total number to 132 nationally.
The group plans to be able to be able to conduct sales transactions online by the end of 2012 and to enhance its supply chain and manufacturing capability.
It said four of its five businesses delivered improved profit growth.
Despite improvements within its Dare Gallery furniture stores, the group is considering selling the business following a strategic review.
Fantastic lifted its interim fully-franked dividend 30 per cent to 6.5 cents a share from five cents a share previously.
