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ASX 200 up again, ASX retailers make big gains

ASX 200
Credit: Cimexus

The S&P/ASX 200 Index (ASX: XJO) rose by 0.1% to 5,943 points today.

It was retail that dominated the headlines. According to the stats produced by the Australian Bureau of Statistics (ABS), Australian retail sales surged 16.3% in May to $4.03 billion. This is the largest month-on-month rise in 38 years.

On the ASX it was also retailers that had some of the best share price performances:

Nick Scali Limited (ASX: NCK)

The Nick Scali share price climbed by around 20% today, making it one the leading businesses.

The company said that it’s now expecting second half net profit to be up 15% to 20% compared to the second half of FY19, which will help achieve FY20 underlying net profit of between $39 million to $40 million. The underlying profit excludes the impact of the gain of the sale of property and the impact of the adoption of AASB 16.

FY20 revenue is expected to be in the range of $260 million to $263 million. The fourth quarter of FY20 to 14 June 2020 saw written sales order growth of 20.4%.

Nick Scali responded to showroom closures by launching its digital offering, allowing customers to purchase the entire range of Nick Scali products through digital channels. Management see further scope to invest into its digital capabilities, though it’s early days.

Nick Scali estimated that store closures meant $9 million to $11 million of sales were unable to be recorded. However, the range of actions taken by management, plus government support, meant the second half profit should be solid.

The company expects sales revenue for the first quarter of FY21 will be up approximately 30%. This should underwrite profit growth for the first half of FY21.

The Nick Scali board has decided to bring forward the payment of the deferred interim dividend. The deferred 25c per share dividend will be paid on 29 June 2020.

Adairs Ltd (ASX: ADH)

The Adairs share price rose by 10.5% after giving a trading update.

Adairs said that in the 24 weeks to 14 June 2020, like-for-like (LFL) online sales rose by 92.6%. LFL total sales increased by 27.4%.

In the year-to-date numbers, which is for the 50 weeks to 14 June 2020, LFL online sales were up 64% and total LFL sales were up 15.7%.

The managing director and CEO of Adairs, Mark Ronan, said: “Since Adairs stores re-opened we have seen strong sales across both the store network and online channel as customers return for the in-store service and experience they expect from Adairs. Pleasingly, Mocka’s online sales growth has continued at high levels. Both businesses have also remained disciplined on inventory and margin management.

“Our omni channel strategy and focus on the home decorating and furnishing category has served us well during this period where our customers have spent significantly more time at home.”

In terms of final FY20 guidance, the company is now expecting the Adairs division to generate between $358 million to $362 million of revenue (with around 27% of this total being online). Mocka is expected to contribute $27 million to $28 million of sales. Overall, the company is expecting to report $385 million to $390 million of revenue in FY20.

Other noteworthy movements of the day

The ASX 200 gold miner Evolution Mining Limited (ASX: EVN) share price dropped around 1% after giving a Mt Carlton update.

Sydney Airport Holdings Pty Ltd (ASX: SYD) suffered a share price drop of 2% after releasing another monthly update of a huge decline of passenger numbers.

Buy now, pay later business Splitit Ltd (ASX: SPT) saw its share price end 6.9% higher at $1.47, though it reached $1.88 in early trading. Yesterday the company announced it had made an agreement with Mastercard.

The Orora Ltd (ASX: ORA) share price dropped 15.7% today after going ex-dividend.

There were some impressive gains today at the top end of the ASX 200. The AP Eagers Ltd (ASX: APE) share price went up almost 10%, the Netwealth Group Ltd (ASX: NWL) share price rose 9% and the Avita Medical Ltd (ASX: AVH) share price climbed 8.3%.

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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited and Netwealth. The Motley Fool Australia has recommended Avita Medical Limited. 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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