Booming property markets in Sydney and Melbourne have helped push furniture retailer Nick Scali's half year profit to a record high.
Nick Scali’s profits soared by more than 40 per cent to $14.1 million in the six months to December 31 as home buyers rushed out to buy furniture for their new pads.
Managing director Anthony Scali said the record result came off the back of a strong rise in sales, which were particularly solid in July and November.
“The housing sales have certainly helped our business, particularly unit construction in Sydney and Melbourne,” he said.
“We are very pleased with the top line result, together with holding margins at 60 per cent despite the falling Australian dollar.”
He said nine new stores opened during the 2015 calendar year, all of which performed in line with expectations, including two that positively influenced the first half results.
The retailer has forecast a rise of up to 41 per cent in full year profit.
It expects to make a net profit for 2015/16 of between $22 million and $24 million, compared to $17 million a year earlier.
The retailer is planning to add up to six more stores to its existing chain of 48 within the next year.
Impressed investors pushed Nick Scali’s share price up more than six per cent, while the wider market grappled with steep falls.
OptionsXpress market analyst Ben Le Brun said Nick Scali’s sustainable expansion gave investors confidence in the retailer despite the potential of a slowdown in the housing market.
“Nick Scali’s result beat every metric and the outlook is a bit better than what the market had expected,” he said.
“This is very much to do with the housing boom in Australia and while there are expectations that it may cool in 2016, Nick Scali is still standing itself in good stead with new store openings in WA and potentially making a move into NZ.”
During the first half comparative sales, which exclude new store openings, rose 11.6 per cent.
The positive momentum continued into January with comparative sales up 3.3 per cent and total sales rising 24 per cent.
The company expects the trend to continue in the second half.
Other retailers were also enjoying strong gains amid an overall weaker market. JB Hi-Fi was up eight cents at $22.08, while rival Harvey Norman had gained three cents to $4.36.
HOUSING BOOM FUELS EARNINGS FOR NICK SCALI
- Net profit up 40.7 pct to $14.1m
- Revenue up 32 pct to $102.5m
- Interim dividend of 9.0 cents, from 7.0 cents