Beacon Lighting: Niche sector offers big gains

Resources Corner

Beacon Lighting Group Limited (ASX:BLX) made an instant impression when it debuted on the ASX last year, since opening at $0.66 it’s now trading above $2, and while its share price has fluctuated, its broad trajectory has been positive. The good news has continued with the lighting retailer and manufacturer releasing its annual results this week and they’re solid. Sales are up more than 19 per cent and its net profit has leapt forward 43 per cent to $17 million.    
 
It’s a niche industry but in its annual report there is plenty of confidence with low interest rates, property prices and growing dwelling approvals all fuelling the company’s growth potential. There’s also innovation with the company spruiking its new LED products as consumers warm to the style of energy efficient lighting options.
 
Maintaining growth
 
Investments have focussed on new stores, major refurbishments and buying back franchise stores. The stable currently sits at 78 stores, 13 franchise stores and 4 commercial sales offices. FY15 saw 7 new stores open.
 
According to this year’s annual report the company hopes to open six new stores while continuing to improve existing sites. 
 
Innovation is a focus with efforts at being first to market with the latest trends and technology in lighting. 
 
Online is also an obvious avenue that it appears Beacon haven’t yet wholly embraced, but that looks set to change. They have a new e-commerce sales channel that became operational in July. 
 
Online
 
It’s been reported that Beacon’s online sales are only hovering around the low single digits, but it’s clear this is an area of significant growth potential. 
 
While Beacon Lighting designs and sells an innovative range of lighting fixtures, they also offer a plethora of stock-standard lights and fans that every house needs.
 
It’s here that there seems to plenty of space for startup disruptors to launch online offerings that forgo the overheads of bricks and mortar stores to compete with lower prices.
 
Amy Hermes from Lighting and More says she is in no doubt that the housing boom and the DIY trend will help her business grow. “The growth in housing looks set to continue and beyond that, products like LED downlights will continue to be popular as energy efficiency becomes more important.
 
 
All businesses face the threat of digital disruption and with surging profits it’s clear why Beacon will continue to shine bright as a target.