Furniture retailer Nick Scali Limited (ASX: NCK) has seen its share rise 8.8% today to $2.96 after the company reported its interim results yesterday evening.
The company reported a 10% rise in net profit to a record $10 million for the first half of 2015 financial year. Revenues rose 8.3% to $77.6 million. Pleasingly, Nick Scali also managed to increase its earnings before interest and tax (EBIT) margin from 15.1% last year to 18% this half.
Nick Scali declared a fully franked interim dividend of 7 cents per share.
Same store sales growth was muted at 1.2%, compared to last year's amazing 8.5%. January is traditionally the company's strongest trading month, and Nick Scali says it saw 7% growth in sales orders compared to last year.
An additional three stores were opened during the half, taking store numbers to 41 in total. The company plans to open a 5 further stores in the second half.
Nick Scali says its expansion into Western Australia will result in significant start-up costs being incurred, and WA stores are expected to take longer to reach maturity. The company also says that the continuing decline in the Australian dollar may bring further challenges to maintaining sales and margins this year.
That suggests the company could report a lower-than-expected net profit for the 2015 financial year given the additional capital outlay and expenses, but should prove positive over the longer term.
With significant insider ownership and a fully franked dividend yield of around 4.5%, Foolish investors could do worse than add this company to their watchlist.
