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This high-flying retail star expects to grow earnings by 70% in FY 2018


The Noni B Limited (ASX: NBL) share price could be on the move on Thursday following the release of a trading update for the 12 months ended July 1.

In early trade the fashion retailer’s shares are flat at $3.04 and have yet to add to their 12-month gain of 74%.

How did the company perform in FY 2018?

According to this morning’s release, Noni B achieved total sales of $364 million in FY 2018, up almost 15% from FY 2017’s sales of $316.8 million.

Key drivers of this growth were an impressive 4.5% rise in like-for-like sales during the period, the expansion of its store network from 614 to 641 stores, and a sizeable increase in online sales.

In respect to the latter, online sales now account for 5.8% ($21.1 million) of total sales compared to 3.6% ($11.4 million) in FY 2017.

As a result of this strong sales growth, Noni B expects earnings before interest, tax, depreciation and amortisation (EBITDA) for FY 2018 to be approximately $37 million.

This is consistent with broker expectations and represents growth of over 70% on the prior year’s underlying EBITDA of $21.7 million.

What about FY 2019?

While management hasn’t provided any guidance for FY 2019 yet, it has described the new financial year as a year of transformation for the company.

This is because it recently completed the acquisition of the Millers, Katies, Crossroads, Autograph and Rivers brands from Specialty Fashion Group Ltd (ASX: SFH).

Its focus is now on its implementation and integration plan, consistent with the approach taken by Noni B in prior acquisitions. Progress thus far has been pleasing according to management, and it remains confident that it will deliver on its targets.

Should you invest?

I think Noni B is one of the best small cap retailers on the Australian share market and well worth taking a closer look at.

It may not be as cheap as it was 12 months ago, but I still see a lot of value in its shares for those willing to make a patient buy and hold investment.

Elsewhere in the retail sector today the Lovisa Holdings Ltd (ASX: LOV) share price has tumbled 8% despite there being no news out of the company.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.

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