Nick Scali has upgraded guidance for the first half of FY21, saying it expects underlying profit to come in double that of the previous first half (!) -- due to increased delivery volumes and continued strong sales.
It appears sales accelerated in the second quarter; increasing from 45% in Q1 to 58% in Q2, thanks to the reopening of the Melbourne store and successful sales campaign.
Importantly, written sales exceeded delivered sales by $20m at the end of calendar 2020 -- which means investors can expect a very stroing second half (you cant book sales until delivery is made).
New Store opening and ongoing success with the online channel and will further help.
It has to be said, Nick Scali is one of the best managed companies on the ASX. Remember, this is a furniture retailer (!!) but it consistently has a return on equity >40% (huge, albeit off a levered balance sheet), per share sales and earnings have grown at ~12% and ~20% (respectively) since 2011. Dividends have also grown at around 20% per year, on average, over the period. Even stronger in the past 5 years.
Over that time, the company has raised no fresh capital, with the share count remaining completely unchanged.
At present, shares are on a PE of ~13 and offer a yield of 4.5%.
Managing Director Anothony Scali (son of founder Nick) owns 13% of the company.
(interesting side note, the family sold down a large stake a few years back -- something that has cost them millions and a good reminder that insider selling isnt always a bearish signal)
I've previously worried that such high rates of growth could not be sustained, and that performance was very much tied to housing construction. That may (or may not be) true -- but these guys are clearly doing something very right!!
ASX announcement here
