Investors are so desperate that they were grasping for any good news from the current reporting season, even if earnings fall short but ‘beat’ guidance or market forecasts.
Coles is a prime example with its surprise ‘update’ yesterday (see separate story), so too investors interest in furniture retailer, Nick Scali.
Shares in Nick Scali shares jumped more than 13% at one stage yesterday after the company beat its underlying first-half profit guidance, but its net result fell noticeably short.
The company blamed that on a “fragile consumer environment” as revenue for the six months to December 31 fell 2.5% to $137.5 million, thanks to a rotten first quarter when it experienced a “significant drop in-store traffic” and negative comparable store sales growth of 8.3%.
The December quarter though saw a big improvement but that wasn’t enough to save the full six months and net profit fell 15.7% to $21.4 million.
However, its underlying interim profit result of $20.1 million just topped guidance offered in October of between $17 million to $19 million.
“During the second quarter we achieved 3.5 percent like-for-like written orders growth, which was a vast improvement compared to the first quarter,” Managing Director, Mr. Anthony Scali said.
Shares in the company rose as high as $8.24 on Thursday before easing to end at $8, up 10.8% for the day.
Directors left interim dividend unchanged at 25 cents per share, fully franked.
Despite seeing a recent improvement in sales and store traffic during the December quarter, Nick Scali on Thursday said there is “still uncertainty around the current level of consumer confidence”.
“(This) has been exacerbated by the coronavirus outbreak and other factors, and consequently, it is very difficult to provide guidance as to the profitability for the full year to June 2020,” it said.
For the month of January, which the company says is its biggest trading month, written orders declined 1.7% and the company had seen delays from factories in China.
