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Nick Scali share price storms higher on record profit result

James Mickleboro
ASX retailer Nick Scali furniture

One of the best performers on the All Ordinaries index on Thursday has been the Nick Scali Limited (ASX: NCK) share price.

In early afternoon trade the furniture retailer’s shares are up almost 8% to $6.62 following the release of its full year results.

How did Nick Scali perform in FY 2019?

For the 12 months ended June 30, Nick Scali reported sales revenue of $268 million, which was an increase of almost 7% on the prior year.

This increase was driven by the full year contribution from the stores opened during FY 2018 and contributions from the six stores opened during FY 2019. This offset a 1% decline in same store sales.

And for the seventh consecutive year, the company reported a record full year profit. Nick Scali reported a net profit after tax of $42.1 million, up 2.8% on last year’s result.

Managing Director, Anthony Scali, said: “The result was satisfactory given that furniture purchases are highly discretionary and have a strong correlation with housing sales. In the past twelve months, Australia has experienced a significant slowdown in dwelling sales and the consumer has seen the value of their homes fall with the negative wealth affect resulting in a very cautious consumer.”

The Nick Scali board declared a fully franked final dividend of 20 cents per share, bringing its total dividend for the year to 45 cents per share. This was an increase of 12.5% on FY 2018’s 40 cents per share dividend and represented a payout ratio of 87%.

Outlook.

The company intends to open four new stores in FY 2020, two of which will be in Auckland, New Zealand. If it achieves this it will lift its total network to 61 stores, which is still well short of its long term store network target of 80 to 85 stores across the ANZ region.

Management sounded cautious on the year ahead, but remains confident that “it can deliver a solid profit performance in an environment of flat to negative same store sales growth.”

It also advised that it is “well positioned with a strong balance sheet and solid cash flow. This will facilitate the continued growth of its store network and allow the Company to explore other growth opportunities as they arise.”

Also impressing with their respective full year updates today were property group Mirvac Group (ASX: MGR) and adventure retailer Kathmandu Holdings Ltd (ASX: KMD). Their shares are up 4% and 13%, respectively, this afternoon.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019