Why the Dusk (ASX:DSK) share price is in focus

The Dusk Group Ltd (ASX: DSK) share price is one to watch this morning after a strong trading update highlighted by surging earnings.

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The Dusk Group Ltd (ASX: DSK) share price is in focus this morning after the company reported a surge in quarterly earnings.

Why is the Dusk share price on watch?

Dusk this morning provided a trading update for the third quarter ended 31 March 2021 (Q3 2021). The Aussie retailer reported “trading remained strong” with high rates of like-for-like sales growth.

Sales surged to $27.7 million for the quarter, up from $18.4 million in Q3 2020. On a year-to-date (YTD) basis, sales grew 54.2% to $118.7 million compared to 2020 figures.

Underlying earnings before interest and tax (EBIT) numbers also soared during the quarter. It will be interesting to see how the Dusk share price responds as underlying EBIT surged to $4.9 million, up from a $0.9 million loss in Q3 2020.

On a YTD basis, underlying EBIT rocketed 281.6% to $33.2 million in Q3 2021. Dusk said the primary driver of the earnings growth was excellent like-for-like sales growth of 44% for the quarter.

The Aussie retailer also reported strong gross margin expansion which is up ~400 basis points on a YTD basis. Dusk’s EBIT margin also grew to 28.0% for the quarter, up from 11.3% on a YTD basis in Q3 2020.

In further news that could impact Dusk shares today, the company also provided FY2021 guidance. Sales are forecast to land between $147 million and $151 million with underlying EBIT guidance of $38 million to $40 million.

Today’s strong trading update comes on the back of a solid half-year result for the Aussie retailer. 

Having listed in November 2020, the Dusk share price was on fire in late February after a bumper result. The company reported half-year revenue of $90.9 million, up from $58.6 million in 1H 2020.

Earnings per share (EPS) more than doubled, up from 11 cents in 1H 2020 to 27 cents in the most recent half-year period. The board declined to provide full-year FY2021 guidance at that time, making today’s update an important one for shareholders.

Foolish takeaway

The Dusk share price will be on the radar this morning after the company delivered a strong trading update and provided full-year guidance.

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Motley Fool contributor Ken Hall 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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