Plush profit for Nick Scali with record deliveries

Plush profit for Nick Scali with record deliveries

Image via Nick Scali on Facebook.

Listed furniture retailer Nick Scali (ASX: NCK) is sitting pretty after today reporting record revenue and a 70 per cent uplift in net profit after tax to $60.6 million in the first half of FY23.

The results, including six months of revenue contribution from Plush-Think Sofas which was acquired in November 2021 for $103 million, detailed a 57.4 per cent lift in revenue to $283.9 million.

These strong revenue figures were supported by record deliveries due to a ‘large outstanding order bank at 30 June’ according to the retailer.

“Record revenue in the half has been a tremendous achievement by our distribution teams which demonstrates the operational capacity in the business to support future volume growth,” Nick Scali managing director Anthony Scali said.

“In 2H FY23 we are commencing a twelve-month programme of refurbishment of over 40 Plush stores with new and improved product, image and store appeal to customers.

“We are excited about the potential to improve foot traffic and conversion in the current Plush store network.”

The group’s gross margin felt a 2.5 per cent improvement to 62 per cent, due to improving margin in Plush as acquisition synergies continued to be realised through combined group product sourcing.

NCK’s cost of doing business as a percentage of revenue also improved by 2.9 per cent to 32.3 per cent, while total expenses reflected the inclusion of Plush for the full current period and additional temporary local distribution costs to support the increased delivery volumes.

Nick Scali said the Plush integration was now complete, with IT and distribution officially fully integrated, leading to synergy savings of $20 million per annum.

During the half, Nick Scali opened one new store in Helensvale, Queensland and one new Plush store in Capalaba, Queensland. The company hopes to open four new stores in the remaining six months of the fiscal year.

Ultimately, Nick Scali says it hopes to hit a long-term target of at least 85 Nick Scali Stores and 90-100 Plush stores. As of December 31, the company had 63 Nick Scali stores across Australia and New Zealand, and 44 Plush stores in Australia.

While online written sales orders were softer at $12 million for the half - down from $16.6 million - the company notes the comparison to 1H22 includes previously recognised impacts of COVID-19 restrictions which led to store closures and drove shoppers to the company’s online offering instead.

The retailer’s board has declared a fully franked interim dividend of 40 cents per share, representing a payout ratio of 53.5 per cent - compared to a ratio of 85 per cent in the prior corresponding period.

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