The Dusk Group Ltd (ASX: DSK) share price is down 5% after the fragrance business released its FY21 result and big profit growth.
Dusk’s FY21 result
Dusk reported that its total sales increased by 47.4% to $148.6 million. This was driven by store like for like sales growth of 32.9% and online sales growth of 27%. The average transaction value was 12% higher at $51. It has had a strong year of trading.
The number of its Dusk rewards active members increased 31% to 688,000. This is a pay to join membership program. Members represent 60% of sales and 52% of transactions. They spend more and shop more often than non-members.
Ten new stores were opening during the year, with new locations across several states.
The Dusk gross profit increased by 54.4% to $101.3 million, showing an increase in the gross profit margin.
Pro forma means a company’s attempt to provide the best measure of underlying performance. The pro forma EBIT (EBIT explained) increased by 224.7% to $38.4 million. Pro forma net profit after tax (NPAT) rose 225.5% to $26.8 million.
Dividend
The board decided to declare a fully franked dividend of 10 cents per share.
That represents a dividend yield of 3.2% at the current Dusk share price.
Trading update
Dusk said that trading for the first seven weeks of FY22 has been disrupted with around 35% of potential trading days lost due to COVID-19 restrictions and store closures. Top line sales are down 28%. But in stores that are open, it is seeing strong customer conversion rates and elevated transaction value.
It’s expecting a return to good sales once stores open.
Outlook for Dusk and the share price
Dusk said that record signups for Dusk rewards in FY21 are a clear signal of future purchase intent into FY22 and beyond.
The current lockdowns are disrupting the business, but they won’t go on forever. Dusk has shown an impressive level of profitability. It will be interesting to see if that can continue in FY23 – when I assume COVID-19 impacts hopefully will be gone. Some businesses like Adairs Ltd (ASX: ADH) and Super Retail Group Ltd (ASX: SUL) have achieved strong gross profit margins, but this could fall back a little.
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