Beacon Lighting (ASX:BLX)
is not letting the 2022-23 performance slide hold it back from continuing its expansion program. The company states that it still intends to open an additional eight stores in this financial year to supplement its current 119-store portfolio. Some of these openings were postponed from the 2022-23 year.
This determination remains in place despite the spending slowdown among households due to high inflation and interest rates. This slowdown led to a 17.5% decrease in net profit after tax, amounting to $33.6 million for the year ending in June.
The company has been adversely affected by the decline in new home construction and renovations. Consumers have scaled back plans for new houses or improvements, resulting in numerous home builders, both large and small, facing financial difficulties.
The drop in earnings is more pronounced than what was observed at the halfway point, with earnings down by 6.6%, totaling just over $21 million. This decline occurred despite a modest 2.5% increase in revenue, reaching $312 million for the year. This growth rate is noticeably slower compared to the nearly 9% revenue increase during the first half of the year.
Beacon reduced its final dividend to 4 cents per share from the 5 cents offered a year ago and the 43 cents per share provided during the interim period. Consequently, the total annual payout dropped to 8.3 cents per share from the previous 9.3 cents.
Beacon cited the challenge of managing expense growth due to high inflation. Operating expenses increased by 6.9% for the year. Additionally, delays in property projects across the country constrained the company's sales growth throughout the year.
"These property constraints in FY2023 provide Beacon Lighting with a very significant store opening program in FY2024. Company store comparative sales increased by 0.4% in FY2023, with positive comparative growth in H1 FY2023 followed by a decline in H2 FY2023. South Australia, Victoria, and Western Australia achieved the best comparative sales results in FY2023.
"Numerous supply chain disruptions and risks were present throughout the COVID years and into early FY2023. In response, Beacon Lighting increased orders for safety stock. Coupled with expanded factory manufacturing capacity in FY2023, factories shipped stock early, resulting in a record stock investment in December 2022. Throughout H2 FY2023, the Group managed a gradual decline in stock investment, reaching $96.9 million at the end of June 2023.”
Looking ahead to 2024, Beacon affirmed that due to the property project delays in FY2023, an extensive company store opening program is planned for FY2024. The company's growth strategy remains centered on expanding the product range and effectively marketing these products to both new and existing customers," as stated by the directors.