Beacon Lighting is expected to open a record number of stores in the next few months after battling through the collapse of Masters Home Improvement late last year.
The retail lighting chain was hit hard by discounting of lighting lines in the Masters' fire sale but now Woolworths' failed hardware chain has shut, Beacon is on track for a positive second half and new financial year.
The lighting retailer, which has a $377 million market capitalisation, said comparative sales were positive in its company owned stores in the early part of the second half and with Masters gone it was focused on expanding its market share through new stores, acquisitions and fresh product lines.
Stockbroker Morgans is forecasting a record rollout of new Beacon stores in the second half, including acquisitions from within the broader, $3 billion lighting market.
Related Content
Morgans said Beacon's expansion could accelerate into the 2018 financial year with market watchers suggesting it could move into some of the former Masters sites that Home Consortium plans to transform into multi-tenant retail properties.
Beacons' trading conditions have "turned positive", according to Morgans, and combined with the "step-up" in new store rollout the operation should have "a solid 12 to 18 months of growth".
Half-year sales increased by 10.9 per cent at Beacon to $109.2 million but net profit slumped by 15 per cent to $9.4 million.
The Masters liquidation "really hurt" Beacon, according to retail analyst Geoff Dart, because the failed hardware chain's fashion-forward lighting selection was in direct competition with Beacon's product lines.
Mr Dart said with Masters gone, Beacon could focus on the opportunities in what was a highly fragmented sector.
"Beacon is the market leader and they still only turned over about $200 million last financial year in what is a $3 billion market," he said.
Part of Beacon's growth strategy was always to capitalise on the collapse of smaller lighting retailers and acquire these businesses to expand its reach, Mr Dart said.
"It's similar to the Reece strategy and it's why Beacon and Reece are such standout performers in the home improvement sector."
Reece's half-year sales revenue increased by 6.1 per cent to $1.2 billion and net profit for the six months ending December 31 was up 6.9 per cent to $96.1 million.
Beacon's shares last traded at $1.82, up from their one-year low of $1.24 last May. Reece closed at $42.20, compared with $32.47 a year ago.
0 comments
New User? Sign up