Key points
- Nick Scali shares climb amid mixed first-half FY22 results
- Revenue up 5.4% to $180.3 million, but NPAT down 6.6% to $35.6 million
- Interim dividend declared of 35 cents per share
The Nick Scali Limited (ASX: NCK) share price has moved into the green this morning following the release of the company's half-year results for 2022.
At the time of writing, the furniture retailer's shares are up 3.54% to $14.91 apiece. This comes after they slumped to $13.80 at market open.
Let's take a closer look at how the company performed for the period.
Nick Scali delivers mixed results for H1 FY22
The Nick Scali share price is climbing following the company's result for the 6 months ending 31 December 2021. Here are some of the highlights:
- Revenue increased to $180.3 million, up 5.4% on the prior corresponding period (pcp) (H1 FY21 $171.1 million);
- Earnings before interest and tax (EBIT) fell to $55.1 million, down 3.7% on the pcp (H1 FY21 $57.2 million);
- Net profit after tax (NPAT) declined to $35.6 million, down 6.6% on the pcp (H1 FY21 $38.1 million);
- Earnings per share (EPS) backtracked to 44 cents, down 6.4% on the pcp (H1 FY21 47 cents per share); and
- Interim dividend dropped to 35 cents per share, down 12.5% on the pcp (H1 FY21 40 cents per share).
What happened in the first half for Nick Scali?
After a challenging 6 months, the group's sales momentum continued despite revenue being down. This was attributed to widespread store closures and production delays, particularly in Vietnam.
Despite the hard lockdowns, Australia and New Zealand written sales orders exceeded sales revenue as supply chains peaked during H1 FY22.
The gross profit margin for Nick Scali was up 30 basis points to 64.3%. The gross profit margin for Plush was 54.8%, resulting in a combined margin for the group of 63.2%.
The online sales channel soared to $19 million in written sales orders. This comprised $13.7 million for Nick Scali and $2.4 million for Plush.
In addition, the company's Plush acquisition added 46 showrooms to its network during the period. Nick Scali also opened up a new store in regional New Zealand, which was a first for the company.
What did management say?
Commenting on the result fuelling the Nick Scali share price, managing director Anthony Scali said:
Despite over half of our stores being closed between July and October, and the impact of international lockdowns on our key suppliers, we were still able to deliver a strong earnings result, which was 75% up on H1 FY20.
We are very excited about the recent Plush acquisition which is on track to provide significant sales and profit growth for the Company as we expand the store network and benefit from the synergies of a fully integrated business.
What's next for Nick Scali?
Looking ahead, Nick Scali expects revenue growth to continue into the second half of FY22.
Last month, written sales orders increased by 31% on the pcp, and were up 92% compared to the first half of FY20. This was driven by a surge of store traffic as consumers adjusted to managing the pandemic.
Nick Scali noted the outstanding order bank at 31 January was 70% higher than in the previous year.
In addition, the company's suppliers have since resumed normal lead times which should lead to revenue growth in H2 FY22.
However, shipping constraints due to COVID-19 remain a major obstacle in delivering the outstanding order bank. This may impact profitability in the coming months.
Nick Scali share price snapshot
The Nick Scali share price has fallen around 6% this year to date. However, it is up around 35% over the past 12 months.
It has also risen by more than 8% this week.
