Thrift and slowing housing construction blow to Scali

Managing director of Nick Scali furniture Anthony Scali.FURNITURE retailer Nick Scali received a strong tailwind from the federal government’s recent carbon tax compensation payments, which boosted fourth-quarter sales, but hit weaker conditions in July and said it was unable to provide a profit forecast for the 2012-13 financial year.
Nanjing Night Net

Managing director Anthony Scali said consumers continued to save rather than spend money. That, combined with a slowing Australian housing construction market, meant the retailer would need to depend on earnings growth from the stores it had opened over the past 18 months.

Nick Scali yesterday reported a 22.3 per cent fall in full-year net profit to $9.024 million, which was at the bottom end of a trading update provided in May. The weaker than expected result was due to a slump in its gross margin, down to 60.8 per cent from 62.7 per cent, as the retailer was forced to offer promotions and discounts during the year to drive traffic into its stores and generate sales orders.

Revenue for the period rose 9.4 per cent to $109.39 million, but more than $7 million in furniture orders were not included in the accounts and will show up in the 2012-13 result.

The company declared a final dividend of 3.5¢ a share, down from 4.5¢ in the previous corresponding period.

Mr Scali said a strong fourth-quarter order book was most likely the result of the compensation paid to households for the carbon tax. Orders in July were down, and the volatility of the past 12 months continued to affect operations, with directors unable to predict the company’s full-year results for 2013.

Shares in Nick Scali ended down 5¢, or 3.5 per cent, at $1.40.

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