The Nick Scali Limited (ASX: NCK) share price is up after revealing a strong update for FY21 with big sales growth.
How good is Nick Scali doing?
Nick Scali said that strong positive trading momentum has continued in the second half of FY21. In the first half of FY21, total written sales went up 52%.
In the third quarter of FY21, total written sales orders grew by 50%, which includes same store written sales order growth of 41%.
Written sales orders remained strong in April with growth of 242% compared to April 2020, which was significantly impacted by store closures.
Written sales orders for April 2021 were in line with March 2021 and up 37% compared to April 2019.
What profit is Nick Scali expecting in FY21?
There are still container availability issues that are affecting the supply chain. But, FY21 year to date sales revenue growth is around 44% higher to the end of April and this expected to continue through the rest of the fourth quarter of FY21.
Nick Scali is expecting to generate $120 million of EBITDA (EBITDA explained) for the 30 June 2021 financial year. That forecast includes the net repayment of jobkeeper subsidies received in the first half of FY21.
Management are now expecting net profit after tax (NPAT) to be in the range of $78 million to $80 million. This would represent an increase of around 85% to 90% compared to FY20.
Nick Scali said the above guidance remains subject to no further delays or adverse material impacts on container availability in the lead up to 30 June 2021.
FY22 could be good too
The furniture retailer said that the order bank at the end of April continues to remain at elevated levels which provides a good foundation for revenue growth as the company enters FY22.
Summary thoughts on the Nick Scali share price
Nick Scali is clearly doing well during these very strange times. Who knows how long the strong retail environment will continue? Will it drop off now that borders are starting open and jobkeeper is turning off? Only time will tell.
I’ve always thought of Nick Scali as a cyclical name. But it has continued to impress. It’s a more reliable business than I thought, but I’d still be careful about investing today if sales start slowing down.