The Nick Scali Limited (ASX: NCK) share price is popping today following the release of its full-year earnings results.
At the time of writing, the furniture retailer's shares are up 3% trading at $10.31.
Nick Scali ramps up final dividend as revenue rises
Here are the key highlights of how Nick Scali performed for the 12 months that ended 30 June 2022.
- Revenue up 18.2% on FY21 to $441 million
- Underlying earnings before interest and tax (EBIT) down 2.8% to $124.6 million
- Underlying net profit after tax (NPAT) down 4.9% to $80.2 million
- Earnings per share (EPS) of 92.5 cents, down from 104 cents per share
- Final dividend up 40% to 35 cents per share, fully franked, bringing the full year dividend to 70 cents per share, up 6.7%
How did Nick Scali perform in FY 2022?
Throughout FY 2022, the group increased sales revenue by 18.2% to $441 million. This was despite significant shipping delays in the second half due to strict COVID-19 lockdowns in Shanghai.
Moreover, its Plush acquisition in November 2021 contributed $88.8 million in sales revenue for the period.
Nick Scali's overall gross margin was down 250 basis points to 61%. This came from the dilutive impact of the lower margin Plush business as well as elevated costs in international freight.
Operating expenses within the Nick Scali Furniture business remained at similar levels to previous years. The company continued to leverage its fixed cost base to record strong levels of net profitability in the underlying Nick Scali Furniture business.
In addition, the company's Plush acquisition added 46 showrooms to its network during FY 2022. Nick Scali opened up its first-ever new store in regional New Zealand, bringing the total store network to 108 stores.
The board declared a fully franked final dividend of 35 cents per share. On a full-year basis, this represents a payout ratio of 76% compared to 63% in FY21.
What did management say?
Nick Scali managing director Anthony Scali had this to say about the company's results:
FY22 was a particularly challenging period, with store network closures and lockdowns in sourcing countries impacting the business at various stages throughout the year.
Despite these challenges, the group was still able to deliver a strong result and end the year with a significant order bank which will translate to revenue in FY23.
We continue to be pleased with the Plush acquisition and have seen increased scope for synergies as the integration of the business has progressed.
What's next for Nick Scali?
Looking ahead, Nick Scali expects FY 2023 revenue to be materially above the previous financial year.
At the end of June, the group had an outstanding order book of $185.2 million.
Furthermore, July trading recorded an uptick in total written sales orders of $43.2 million, up 64.1% from July 2021.
However, shipping constraints and inflationary pressures remain a major obstacle in delivering the outstanding order bank. This will likely impact operating costs over the next 12-24 months.
Given the murky economic outlook, Nick Scali refrained from providing any additional guidance for FY 2023.
The Nick Scali share price is down 35% since the beginning of the year.
