The Reject Shop Ltd

FY18 NPAT outlook is positive:The Reject Shop Ltd (ASX: TRS) has delivered 1.1% rise in the Net Profit After Tax (NPAT) to $17.7 million, for 1H 2018 against the previous corresponding period, and this is also ahead of 1H NPAT guidance range of $16.0 million - $17.0 million. The company has reported 1.1% growth in sales to $437.6 million. The company in the first half had net six new store openings and three relocations, while net six new store openings were also noted in the prior year. The company finished the half with 353 stores. Further, in 1H 2018, TRS’ comparable store sales grew 0.4% on prior year (Q1: -1.9%; Q2: + 2.2%) due to an increase in the Comparable Customer counts, which offset a slight fall in average basket during the period. The company has posted positive comparable store sales despite the drag of continuing negative comparable store sales in West Australia, where the combination of intense competition and a particularly tough economic environment are affecting the sales. Additionally, TRS expects 2H 2018 Comparable Sales growth in the range of 1%-2%. NPAT for FY18 is expected in the range of $16.5 million to $17.5 million. Meanwhile, TRS stock has risen 31% in three months as on March 01, 2018 and is sensitive to same-store sales scenario. Overall, the stock looks “Expensive” at the current price of $7.04
 

Nick Scali Ltd

Recent trading from existing stores is volatile: For 1H 2018, Nick Scali Ltd (ASX: NCK) has reported 15% rise in net profit after tax to $23.5m and an 8.1% increase in sales revenue to $128m. The sales grew due to the ongoing store network expansion during FY17 and FY18 in addition to first half FY18 same store sales growth of +2.6% for Nick Scali Furniture stores (excluding Sofas2Go). However, the recent trading from existing stores is volatile with December having the positive same store sales growth, while sales in January was negative. Moreover, for FY18, two of the six new stores will make a reasonable contribution to second half profit whereas the other four will provide only a small contribution due to start-up costs. For FY18, NCK expects the net profit after tax to be 5% to 10% higher than the previous corresponding period and FY19 is expected to benefit from the substantial increase in the store network being established during FY18. Meanwhile, NCK stock has risen 7.73% in three months as on March 01, 2018 and is inching towards its 52-week high price. With many positives factored in the stock price while some volatility on sales is prevailing, the stock looks “Expensive” at the current price of $7.16
 

Half Yearly Financial Performance (Source: Company Reports)

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