Beacon Lighting Group Ltd share price up 7.8% on glowing report

The Beacon Lighting Group Ltd (ASX: BLX) share price is up 7.8% after it reported its shining result for the 26 week period to 24 December 2017.

Beacon Lighting Group is the business behind Beacon, the lights and accessories retailer.

Here are some of the highlights compared to the prior corresponding period:

  • Sales increased by 12% to $122.4 million
  • Gross profit margin increased to 65.1% from 62.1%
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 23.9% to $18.76 million
  • Net profit after tax (NPAT) increased by 19.7% to $11.3 million
  • Dividend per share increased by 6.38% to 2.5 cents

The company achieved a record first half of sales. Company store sales increased by 14.2%, commercial office sales increased by 19.2% and Beacon International sales increased by 37.5%.

Comparative sales increased by 1.8% with good growth in Victoria and South Australia whilst Western Australia remained a problem.

The company attributed some of the improvement to its performance to returning to its regular marketing program.

A slight concern for me whilst looking through the report was that net operating cash flow decreased by almost 22%, even though profit increased. Hopefully the increase of stock is a sign of more sales to come in the next six months.

The company was pleased with its store network growth, opening 15 new company stores in the last 19 months, which will ‘mature’ in the coming years. The company also introduced the Afterpay Touch Group Ltd (ASX: APT) service to stores in two states, which will hopefully boost sales.

Management are also trying to offer a more bespoke package by rolling out its ‘Premium Beacon Design Services’ to stores and the company also increased its ‘Accredited Lighting Design Consultants’ to 299 at the end of December 2017 from 60 a year ago.

Foolish takeaway

Beacon is expecting record sales and profits in FY18 after comparative sales have continued to grow modestly during the new year. New stores and growing margins should be a boost for the business.

This seemed like a positive report from Beacon, with many commentators saying that retail-related stocks could struggle in the near future. Perhaps it may still struggle, but for now the business is a shining light in the retail sector.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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