Furniture retailer Nick Scali posted a record 10.1 per cent increase in net profit after tax (NPAT) to $41 million in FY18, up from $37.2 million in the previous year.
The strong result was driven by a 20 per cent rise in gross margin to 62.7 per cent and a 7.7 per cent boost in total sales to $250.8 million, up from $232.9 million in FY17.
Nick Scali opened six new stores in FY18, including five in Australia and one, the company’s first, in New Zealand.
“The result demonstrates that the continued store roll out provides significant leverage enabling us to improve our operating margins and also lower our cost ratios, which is essential for future profit growth,” Nick Scali managing director Anthony Scali said.
“Our cash flow and balance sheet remain strong, allowing us to take advantage of opportunities that may arise.”
But at the same time as Nick Scali is expanding its store network, other retailers in the category have closed stores, with John Cootes recently announcing the closure of 12 furniture stores across NSW and ACT.
Nick Scali reported slower same store sales growth during FY18 after two years of double-digit growth. While trading conditions have been difficult, the company saw positive growth since June.
The retailer said the performance of its first New Zealand store has been “extremely encouraging” and said a second store will be opening in the country in October 2018.
Product and brand acceptance have been better than had been anticipated, and the company is confident that its international expansion will generate significant profit growth in the future.
Nick Scali confirmed the opening of six new stores in FY19, five in Australia and the one in New Zealand, growing the company’s total footprint to 60 stores by December 2018 and contributing to its long-term goal of more than 75 stores in Australia and New Zealand.
The retailer plans to introduce a new product category at the end of the first half of FY19, bedrooms and bedding, which is expected to further generate sales growth.
A fully franked dividend of 24 cents per share was declared, up 20 per cent on last year and bringing total dividends for the year to 40 cents per share – up 17.6 per cent on last year.
