Nick Scali (ASX:NCK) share price up 5% to record high on FY 2021 results

This retailer was on form again in FY 2021…

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The Nick Scali Limited (ASX: NCK) share price is rising on Thursday morning following the release of its full year results.

At the time of writing, the furniture retailer's shares are up 5% to a record high of $12.96.

Nick Scali share price higher after doubling profits in FY 2021

  • Sales revenue increase 42.1% year on year to $373 million
  • Same store sales growth of 34%
  • Earnings before interest and tax (EBIT) margin increased 940bps to 32.7%
  • EBIT jumped 100.5% to $121.9 million
  • Underlying net profit after tax doubled to $84.2 million, beating guidance of $78 million to $80 million)
  • Fully franked final dividend per share up 11.1% to 25 cents

What happened in FY21 for Nick Scali?

As you might have guessed from the rising Nick Scali share price, the retailer had a strong 12 months. It reported sales growth of 42% and underlying profit growth of 100% for the 12 months ended 30 June. This was driven by buoyant trading conditions thanks to a booming housing market and a favourable redirection in consumer spending due to travel restrictions.

In fact, demand was so strong that its total written sales orders for the year outstripped sales revenue and came in at $401.6 million. This resulted in an end of year order bank 35% higher than at 30 June 2020.

Positively, despite rising freight and supply chain costs during the year, the company's gross, operating, and profit margins all improved year on year.

At the end of the period, the company had a total network of 61 showrooms across Australia and New Zealand. It continues to assess new opportunities in line with its long-term showroom network target of 85 showrooms.

What did management say?

Nick Scali's Managing Director, Anthony Scali, was very pleased with the company's performance during FY 2021.

He said: "The most pleasing aspect of our FY 21 result, was the ability of our distribution network across Australia and New Zealand to deliver the materially elevated sales revenue whilst maintaining the same level of costs as FY20."

What's next for Nick Scali?

Possibly holding back the Nick Scali share price a touch today was its mixed outlook commentary.

The release explains that the company's performance during the first month of FY 2022 was impacted by government mandated lockdowns in Greater Sydney, Victoria and South Australia. This led to written sales orders falling 27% in July compared to the prior corresponding period. Though, it does note that Victoria and South Australia have traded exceptionally well since coming out of their lockdowns towards the end the month.

In addition, this was offset partly by strong online growth. Nick Scali revealed that online sales increased 88% for the month of July compared to the same period a year earlier.

However, due to the high levels of uncertainty caused by lockdowns, supply chain challenges, and global shipping costs, management isn't in a position to provide guidance at this point.

It concluded: "Despite the buoyant trading conditions, there is a high degree of uncertainty in the current retail environment, due to current and potential future lockdowns, supply chain challenges caused by lockdowns in sourcing countries, as well as the continuing escalation of global shipping costs. Therefore, at the current time, it is not possible to provide profit guidance for the Company for the first half of FY22."

The Nick Scali share price is now up 68% over the last 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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