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At the beginning of 2020 Nick Scali (ASX: NCK) was bemoaning the state of consumer confidence in Australia, but even with the impacts of COVID-19 the company has pulled up relatively unscathed.
The furniture retailer has today reported a profit of $42.1 million for FY20, the exact same amount achieved in FY19, in spite of store closures during the second half.
While sales revenues decreased by 2 per cent, the company's results are nothing to scoff at, especially considering how managing director Anthony Scali described FY19's profit of the same level as just "satisfactory".
This year he says the group's results can be attributed to Australians wanting to spice up their living spaces where many have spent far more time in than usual thanks to stay-at-home orders.
"In recent months, the furniture industry has experienced unprecedented year on year growth as consumers reallocated their spending into the home given an inability to travel combined with an increased amount of time spent at home," says Anthony Scali.
The $42.1 million profit marks Nick Scali's eighth straight year of being a profitable company.
Sales revenue was down slightly $262.5 million, while same store sales contracted by 6.7 per cent, but the company expects a revenue loss through temporary store closures of approximately $9 to $11 million.
A push to online during April when many stores were forced to close thanks to COVID-19 restrictions also paid off, with the online store achieving more than $3 million in sales during the fourth quarter.
Even though Nick Scali's Melbourne showrooms are currently closed, because of the strict restrictions imposed on businesses as part of the city's Stage 4 lockdown, the furniture store is optimistic about its prospects.
"Based on the large increase in written sales orders for the months of May, June & July, sales revenue growth for the first half of FY21 will increase substantially when compared to the same period last year," says Nick Scali.
"As a result of the strong sales revenue growth and after allowing for six weeks of temporary closures in our Melbourne showrooms, the company expects first half profit to be up by at least 50-60 per cent when compared to 1H FY20.
"This remains subject to no further extensions of existing restrictions in Melbourne, further store closures across the network as a result of government imposed lockdowns, or any material delays in the supply chain affecting deliveries."
The retailer has been expanding in New Zealand, where COVID-19 has been essentially eliminated, with one new store opened in Auckland during FY20.
For the first half of FY21 Nick Scali will open two new stores one in Bennett's Green in Lake Macquarie, NSW and the other in New Zealand at Wairau Park on the north side of Auckland.
In May, the company committed to purchase a 3,500sqm property in Adelaide, South Australia. Nick Scali says that store will replace its existing store in Adelaide and will become the company's South Australian flagship shop.
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