Nick Scali committed to WA market
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Furniture retailer Nick Scali Ltd says it remains committed to entering the Western Australian market, adding the delay presented opportunities to achieve a lower cost base amid a slowing economy.
In its annual report released in August, the company had postponed its entry into the state due to difficulty in securing sites in three preferred locations where critical mass could be achieved relatively quickly
Managing director Anthony Scali today said the company, as a "big-ticket" seller, was more exposed than other retailers to the effect of interest rates and slowing housing activity.
Despite this, the company remains cautiously optimist about the future.
The company said today its first half sales and profit for fiscal 2009 will be affected by the slowing economy and weakening Australian dollar.
Mr Scali said while there been encouraging signs of over the past three months in "sales order intake", sales for the first half were expected to be about $2 million below the corresponding period last year.
He also said the weaker Australian dollar was expected to reduce earnings by between $900,000 and $1.4 million.
"The recent weakening of the Australian dollar in a very short period will cause a substantial one-off decline in our gross profit for the first half of 2008/09 and is expected to reduce earnings by $0.9 million to $1.4 million," Mr Scali told the company's annual general meeting today.
"Our net profit after tax for the first half of the current financial year is now likely to be between $2.3 million to $2.8 million."
Net profit or the half year to December 31, 2007 was $4.62 million.
In August, Nick Scali posted a net profit of $6.6 million for 2007/08, down from $8.66 million the previous financial year.
Mr Scali said the company would review its prices and offer new products at competitive prices to help mitigate the adverse effects of a weakening Australian dollar,
The furniture retailer said it planned to open two new stores in Melbourne and one in Adelaide this financial year.