Retailers continue to produce June 30 figures which still show the benefits of the support from federal and state governments, plus the low rates, guarantee of bank lending and bond buying from the Reserve Bank that help keep the economic float.
As a result, shareholders in lighting retailer Beacon Lighting will see a record dividend for the full-year after growing its profits by 70% thanks the COVID driven boom in new housing and renovations.
Beacon reported a 69.4% surge in net profit to $37.7 million for the year June after sales grew a more sedate 14.7% to $288 million.
Company store comparative sales increased by 13.3% in the year, online sales were a record $26 million, up 60.3% and Beacon International saw record sales of $12.3 million, up 45.3%.
The result was in line with forecasts and guidance for a profit of $36.8 million and revenue of $287.5 million.
The company will pay a final dividend of 4.6 cents a share, taking the full-year payout to 8.8 cents, 76% above that paid in 2019-20.
The company, like so many others in building and construction and supplies benefited from the boost from the HomeBuilder assistance package that ended in mid-April, as well as first home buyer packages from various states.
JobKeeper and the cut to interest rates to record lows, support of banking loans and quantitative easing from the Reserve bank also boosted activity in home building and renovations and Beach was one of the eager recipients.
While Western Australia was the company’s “most exciting” state in terms of sales performance, sales remained high in Queensland, South Australia and NSW.
Beacon said it will continue to target tradie customers to get a bigger slice of the building and construction market, with the business now opening stores at 7.30am and developing more trade-specific products.
The surge in sales wasn’t at the cost of margins. In fact, Beacon said its EBIT margin (a key metric in retailing as it measures earnings before interest and tax) jumped to 20.6% from 15.1%. Net margin on after tax profits rose to 13% from 8.8% (a rise of nearly 50% and helps explain the higher growth in profit than in sales.
But it said ongoing lockdowns continued to impact sales.
That apart, Beacon is upbeat on the next year.
“Looking forward into 2021-22, the Beacon Lighting Group is very well placed to take advantage of the working from home trend, increased housing churn, home office upgrades and move to more online shopping,” chief executive Glen Robinson said.
“Despite the ongoing uncertainty associated with the COVID-19 pandemic and lockdowns, the Beacon Lighting Group is excited about the opportunities moving into 2021-22 and beyond.”
Investors liked the positive message and sent the shares up nearly 4% to $1.975.
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Elsewhere in retailing, discount chain Reject Shop Ltd (TRS) also saw a boost, but it wasn’t enough to give shareholders a return for the year to June 30.
TRS told the ASX on Thursday that it lifted earnings in the year to June, but there was no joy for shareholders, unlike those at Beacon.
And while the company declined to issue any guidance for 2021-22, it did warn of higher shipping costs over the foreseeable future which will out pressure on inventories and prices and margins.
Net profit jumped 643% to $8.3 million despite the company’s sales falling 5.1% to $778 million as ongoing lockdowns hurt sales.
The market had been looking for profits of $6.2 million from revenue of $777.4 million, so that was a small beat for the retailer.
Cost cutting helped lift earnings by pressing down on costs as the company’s revamp continues under newish managers.
The Reject Shop said it cut its cost of doing business for the year by $22.5 million for the year, largely through fewer staff and cheaper rents.
But these efforts were partly undermined by an unexpected $9 million the business had to spend on higher international shipping costs.
The Reject Shop has factored those costs into the new financial year, but warned investors they continue to increase each month.
“The Reject Shop turnaround is progressing as expected despite operating in a very uncertain and challenging macro environment,” CEO Andre Reich said on Thursday.
“COVID-19 lockdowns continue and have occurred in every State in which we operate, having a significant impact on customer behaviour. International shipping rates have increased significantly over the past year and appear to be remaining elevated during 20212,” he added.
“I am hopeful that customer shopping behaviour will normalise once broader concerns around COVID19 reduce and more of the community are fully vaccinated.”
The shares leapt nearly 17% to $5.67. As strong as that was, it only took the shares back to the level they were a month ago.
