The ABC also has an interactive website, where we can play around with the effects of interest rate rises on the mortgage stress levels all around the country.
Now, back to NCK. As we all know, WA's economy hasn't exactly been on fire in the past few years after the mining boom burst. NCK entered the WA market back in FY2015 with 3 stores opened in that year. Since then, it has opened a further 3 stores to bring the total in WA to 6 stores.
From every account that I managed to gather, the entry into WA by NCK had been nothing but a success. Newly opened stores became profitable within a relatively short period of time. The supposedly big housing downturn in WA doesn't seem to have any effect whatsoever on NCK's stores in that state.
I'm wondering if anyone can come up with some theories that can explain this conundrum:
- Is it because NCK's target market is in the middle market, where they haven't really experienced the full effects of the downturn?
- Is it because NCK's products are quite aspirational and yet still quite affordable?
- Is it because NCK's products are not that expensive relative to the cost of a new house or a full renovation?
- Is it because NCK's offerings are quite unique and prior to its entry into WA, customers in WA never really had alternatives similar to NCK's?
If the many concerns raised in that Four Corner's program do materialise, the answers to the above questions matter a lot to NCK, as they will provide some clues on how much suffering NCK will face in event of a severe downturn.
Thanks in advance!
NCK Price at posting:
$6.14 Sentiment: Buy Disclosure: Held
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