Furniture retailer Nick Scali's full-year profit has soared to a record $37.2 million but investors have punished the company after it failed to give guidance for the year ahead, saying a looming housing slowdown made predictions too hard.
Strong sales and an expanding network lifted Nick Scali's revenue in the 12 months to June 30 by 15 per cent to $233 million, with four new stores opened in the financial year.
Chief executive Anthony Scali said market conditions had been favourable for furniture retailers over the past few years, as rising home prices push more people into renovating.
"The housing market has been strong, house values are rising and with pretty prohibitive stamp duties people have been renovating and renovating hard," Mr Scali said.
However, the company is bracing for lower sales growth due an expected slowdown in home sales.
"Following 10 per cent - 11 per cent same store sales growth (over the last two years), we're trying to manage that expectation," he said.
Nick Scali shares dropped 8.4 per cent, or 56 cents, to $6.10.
It anticipates rolling out eight to 10 new stores over the next 12 months, including its first New Zealand store opening in December, with its sight set on a total of 75 stores.
"Our growth prospects are basically underwritten by our stores rollout," Mr Scali said.
Seven of 10 locations being prepared are former Woolworths-owned Masters Home Improvement sites ,taking advantage of the supermarket giant's sell off of its underperforming segment.
Nick Scali chief financial officer Kevin Fine said the company also had increased gross margins to 62.5 per cent, driven by significant volume growth in higher-margin furniture made out of hard materials, such as metal, glass or plastic, rather than lower-margin lounges.
"In terms of gross margins, we're pretty topped out - and in an industry context, we're way above everybody else," Mr Fine said.
NICK SCALI'S BUMPER RESULT
* Full year net profit up 42pct to $37.2m
* Revenue up 15pct to $232.9m
* Final dividend up 6 cents at 20 cents, fully franked
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