Candle and fragrance retailer Dusk has posted a profit slide for 2022

Candles and fragrance retailer Dusk has posted a profit slide in 2022 but is buoyed by a recent rebound in sales.

Dusk reported a profit slide of 6.9 per cent to $138.3m in the 2022 financial year.

Candles, fragrances and homewares retailer Dusk has posted weaker sales and a 15.5 per cent drop in its full-year net profit as the impact of Covid-19 store closures and less foot traffic at its shops dented earnings.

However, mirroring the recent performance of other retailers as pandemic restrictions are eased and consumers feel more confident gathering at shopping centres, Dusk has witnessed a rebound in sales over July and August.

This has also triggered a pivot by shoppers from online to in-store purchases, with Dusk’s online sales for the first eight weeks of 2023 down 50.4 per cent but its store sales up 49.5 per cent.

Dusk, which listed on the ASX in late 2020 with an issue price of $2 per share, on Friday reported that full-year revenue for the 53 weeks to July 2 fell 6.9 per cent to $138.39m as net profit slid 15.5 per cent to $18.48m.

For the period total like for like sales were down 10.5 per cent, store sales down 11.5 per cent and online sales up 2.9 per cent.

“There is much to be pleased about in this result when considered in the context of the trading conditions seen in the year, especially in the first half where store closures reduced store trading days by approximately 24 per cent and the Omicron variant reduced foot traffic over summer, including in the important Christmas trading season,” said Dusk chief executive Peter King.

“In 2022, we cycled exceptional like for like sales growth of 32.7 per cent in the previous year. Although total and like for like sales were lower in 2022, we achieved strong results for Christmas and Mother’s Day, and pleasing growth on a two-year basis. Importantly, we feel we consolidated the step change in sales and earnings of the business compared to the pre-pandemic period.”

Shares in Dusk rose 15c to $2.36 in early trade on Friday after the results were released.

Mr King said Dusk’s vertical retail model and careful buying and long-term supplier partnerships ensured inventory levels were well balanced at year end.

“Our Christmas 2022 orders have already been placed and we do not expect any material impediment to inventory inflows ahead of this key trading period.”

He said for the first eight weeks of 2023, total sales are up 33.2 per cent, or $4.2m versus prior year with large channel shifts in the business, with customers returning to stores and sales in the online channel declining materially versus prior year.

“While we acknowledge the more challenging macro-economic environment that is emerging, we are seeing our customer respond well to our offering, especially our new products. Our experience is that strong execution and offering new, exciting and ‘on-point’ product can ‘trump’ economic conditions, and we are seeing this hold true in the current environment.”

Dusk said it expects to open a further five stores in Australia before Christmas and is committed to open its first three stores and a new website in New Zealand across September and October 2022.

Dusk declared a fully franked final dividend of 10c per share, in-line with last year, and payable on September 27.