A wave of pent-up demand from shoppers has helped retailers stage a swift recovery from the coronavirus lockdown, with furniture seller Nick Scali and linen retailer Adairs both reporting surging sales since the reopening of stores.
In a trading update provided to investors on Friday, Nick Scali told shareholders it had witnessed a 20 per cent spike in orders since the beginning of April. The $500 million company was forced to close its 50-odd showrooms in late March due to COVID-19, but began a staged reopening in late April.
Adairs has seen a jump in trade following store reopenings in May.
Net profit after tax for the entire half is expected to be up between 15 and 20 per cent on the prior corresponding half, bringing Nick Scali's full-year profit to between $39 million to $40 million. Full-year revenue is expected to be between $260 million to $263 million.
Meanwhile, manchester merchant Adairs revealed it too had experienced a sales upturn over the last five months, driven almost entirely by its online division which nearly doubled its revenue, up 92.6 per cent.
In-store sales grew just 5.3 per cent after closing for five weeks between March and May. Adairs' overall sales grew 27.4 per cent on a comparable level across the second half.
Shares in both retailers soared after market open, with Nick Scali jumping 17 per cent to $6.71 and Adairs rising 12 per cent to $2.34.
Retail trade in April fell a record 17.7 per cent as stores around the country shut their doors and shoppers were forced to stay home due to a set of stringent social distancing measures. However, the sector is hopeful for a jump in sales through May on the back of government stimulus and an the easing of restrictions.
Sales at Nick Scali in the months of May and June alone have "rebounded significantly" and will be up 54 per cent on the prior year, the company said, pointing to eased government restrictions and pent-up discretionary spending by consumers as the primary reasons.
The company is predicting a recovery in trade will flow through the entire first quarter of the new financial year, forecasting a 30 per cent boost to revenue for the September quarter which will "underwrite profit growth" for the first half of the 2021 financial year.
Adairs chief executive Mark Ronan said it had witnessed a strong rebound in trade after reopening stores in May, though noted there was still heightened uncertainty across the sector.
Nick Scali chief executive Anthony Scali.Credit: Ben Rushton
"Since Adairs stores re‐opened we have seen strong sales across both the store network and online channel as customers return for the in-store service and experience they expect from Adairs," Mr Ronan said.
"Our omni-channel strategy and focus on the home decorating and furnishing category has served us well during this period where our customers have spent significantly more time at home."
Nick Scali will reinstate the 25 cent interim dividend it pulled in late March due to the coronavirus pandemic, which will now be paid to shareholders on June 29.