Expectations of upcoming result

Nicolas Scali reports its full-year result sometime later this week (I think).

For what it is worth, I expect FY2017 Pre-Tax Profit to be around $52m/$53m, which would be 40% higher than FY2016.

Besides the ongoing maturing of stores that were newly-established over the past few years, one of the key drivers of the strength of the result, I expect, will be the Gross Profit Margin, which - given the strength of the A$ during the course of 2017 - could exceed 62% (GP Margin for JH2016 was 61.5% and for JH2015 it was 61.1%).

What makes this ~40% growth outcome particularly noteworthy is the fact that FY2016's result itself was 53% up on FY2015 (which, in turn, was 20% higher than FY2014).  

So, 40% up on 53%, which was cycling a base 20% up, in turn, on its pcp [*].



Viewed in half-yearly terms, JH2017 Pre-Tax Profit is expected to come in at $23m to $24m, up 36% on JH2016 (again, that's quite a rate of growth considering JH2016 was a bumper period, being up 71% on its pcp).

In terms of the final dividend, I'm hoping for 18cps to be declared (up from last year's 14cps final dividend).

Other aspects of the result that will be of interest will be the 30 June 2017 cash balance, which I expect will come in at around $17m to $18m (up on the $16m figure @ 30 June 2016, despite $6m that will have been spent over the past 6 months for the Manly Vale property acquisition), assisted by negative working capital (a decade ago, the required investment in working capital amounted to around 5% of sales; today it is of a similar magnitude, except that it is now a negative number!)


[*]  That's the virtuous cycle - of store maturation coinciding with robust end-demand - in action for you.
(Of course, when store roll-out programs end, and if that happens at the same time that like-for-like happens to be cyclically-negative, then the picture is far less pretty... in fact, it can become downright ugly, something that all NCK shareholders should not forget.  In my experience, in retail-land, growth can hum along in handsome fashion for a number of years... until one day when it suddenly doesn't.)