The Nick Scali (ASX:NCK) share price jumped nearly 4% on the back of today’s AGM and revised earnings outlook announcement for FY21.
The post Why the Nick Scali (ASX:NCK) share price jumped today appeared first on Motley Fool Australia. –
Household furniture retailer Nick Scali Limited‘s (ASX: NCK) shares had jumped 3.92% higher by today’s market close. The surge in the Nick Scali share price came after the release of the company’s AGM address to shareholders this morning.
The share price reacted positively after managing director, Mr. Nick Scali, delivered an announcement that the company has revised its earning predictions previously announced in August 2020. It now expects company earnings before interest and taxes (EBIT) and net profit after tax (NPAT) in FY21 to be materially higher than previously reported. This is on the back of strong sales orders both in-store and on the company’s online platform.
The rise in the Nick Scali share price today erased the decline seen yesterday when the company announced a trading update.
What else moved the Nick Scali share price?
Investors drove the Nick Scali share price higher after Mr. Scali also noted in his address today that, despite the difficulties faced this year with COVID-19 restrictions, the company still managed to deliver a flat profit growth in FY20 compared to FY19.
He highlighted that when stores were re-opened in late April, sales orders jumped by 70% compared to last year as pent-up demand and working-from-home arrangements encouraged consumers to purchase more household items.
The launch of the company’s e-commerce platform in April has also brought a windfall for Nick Scali. The average sale per customer on the platform is $1,800, where high-margin items like coffee tables and bedroom furniture continue to be best sellers.
Online orders have increased by 47% for the first quarter of FY21 compared to the last quarter of FY20. Also, due to the lead time of 8-11 weeks in fulfilling orders, sales orders made in the 4Q20 will be reported in the first quarter of FY21.
Mr. Scali mentioned that after excluding figures from physical stores closed in Melbourne and Auckland as a result of COVID-19 restrictions, in-store sales orders actually grew by 59% in the first quarter this year.
Considering this strong growth in sales, the company has revised up its NPAT growth for the first half of FY21 from 50-60% to 70-80% more than FY20.
Mr. Scali also re-iterated the company’s strategy of buying retail properties and opening stores as owner-operators, as opposed to being tenants. The opening of a store in Auckland and the buying of a new property in Adelaide bring the company’s total network to 58 stores.
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