These are challenging times for ASX retailers but Noni B Limited (ASX: NBL) is confident that it can deliver big earnings growth through to FY20 when it handed in its earnings results this morning.
This bodes well for the NBL share price, which had been under pressure from late last year like the rest of the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index.
I suspect the latest interim results will be well received, and if so, it will join the likes of the JB Hi-Fi Limited (ASX: JBH) share price and Lovisa Holdings Ltd (ASX: LOV), which got a warm market reception to their earnings reports.
Good earnings fit
Noni B reported a whopping 140.4% jump in revenue to $464.4 million and a 31.4% uplift in underlying earnings before, interest, tax, depreciation and amortisation (EBITDA) to $29.1 million for the six months ended December 2018.
The big increases shouldn’t come as a surprise as the results were boosted by the acquisition of five brands from Speciality Fashion Group on July 2, 2018.
Noni B’s cash balance has been pumped up by nearly 90% to $64.7 million in the half but management has decided to hold its interim dividend steady at 9 cents a share.
LFL sales improving
While the all-important like-for-like (LFL) sales measure fell a considerable 3.1% over the period, it has improved since Christmas and should turn positive in the current half year.
LFL sales measures growth from stores opened for at least a year and this metric showed a 1% increase in the month of December.
It may have been a tough Christmas trading period for some retailers, but Noni B seems to have weathered the holiday season well.
Management is forecasting EBITDA of around $45 million for FY19, which represents a 45% increase over last year’s pro-forma results, and the figure is expected to rise to more than $75 million in FY20.
There won’t be many ASX retailers with such a strong growth profile, at least I can’t think of any, although much of the good news is already expected by analysts with consensus forecasts for both periods coming in around those figures.
But the stock could still outperform for two reasons. The Noni B share price is currently down by more than 20% since its October peak and the stock is trading on a FY20 consensus price-earnings multiple of around 7 times.
What’s more, the stock has a fairly respectable trailing dividend yield of around 6% if franking credits are included.
Noni B deserves to be on my watchlist for 2019.