Why the Dusk Group (ASX:DSK) share price is rocketing 14% higher

The Dusk Group share price is rocketing higher today after the home fragrance product retailer provided a market update. Here’s why…

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Dusk Group Ltd (ASX: DSK) shares are rocketing higher in morning trade after the home fragrance product retailer provided a positive trading update and earnings guidance for the first half of the 2021 financial year (FY21). At the time of writing, the Dusk share price has surged 13.89% higher to $2.05.

What’s driving the Dusk share price higher?

The Dusk share price is surging this morning after the company confirmed its sales and earnings growth continued in November and December. Dusk Group reported it also ended the first half of FY21 with no drawn bank debt, significant surplus cash and a well-balanced inventory position.

Dusk’s earnings guidance for the first half of FY21 is based on unaudited financial results to the end of November and a preliminary estimate for December based on actual sales.

The company estimates sales for the first half of FY21 will be in the range of $90.0 to $90.5 million. That compares to $58.7 million in the first half of FY20. Earnings before interest and tax (EBIT) are estimated to be between $26.0 and $27.0 million. EBIT in the first half of FY20 was $9.7 million.

Commenting on the company’s performance, Dusk CEO Peter King said:

The results delivered across the first half of FY21 are well ahead of the results delivered in the prior corresponding period despite a significant period of disrupted trade in Melbourne. They build on the strong results delivered across the past three years and further demonstrate the success of our focused strategy and the ability of our team to execute, including in a volatile environment where agility has been key.

Dusk Group snapshot

Dusk is a specialty retailer of home fragrance products. The company offers a range of Dusk branded products, both from its physical stores and online. Its products include candles, reed diffusers, essential oils, electronic diffusers and air purifiers, and fragrance related homewares.

The company is a newcomer to the ASX, with Dusk shares commencing trading on 2 November 2020. While the reintroduction of lockdown measures in Victoria during its early trading weeks impacted instore sales, Dusk’s online presence offered consumers an alternative to brick and mortar shopping.

Dusk shares closed the first day of trading at $1.69. The Dusk share price reached a previous closing high of $1.92 on 10 December. At time of writing, shares are trading for $2.05 which represents a share price gain since 2 November of more than 21%.

By comparison the All Ordinaries Index (ASX: XAO) is up 13.34% over that same period.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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