Strong sales growth, a growing gross margin and a close eye on costs explain why these numbers from members-only online retail shopping club MySale (MYSL) came in ahead of analyst expectations. Brokerage N+1 Singer had expected the company to report a A$0.1m (£0.06m) first-half loss, so underlying pre-tax profits of A$0.6m came as a pleasant surprise.
The group has been working harder to engage with customers and it seems to be paying off: the active customer base grew by 19 per cent, which helped push online revenues - which account for the lion's share of the total - up at the same growth rate to A$127m. The company is also pursuing what they call "higher lifetime-value" customers, whose order value tends to grow as they get used to the club. In the first half, the average order value rose by 3 per cent to A$86.
The group is also trying to move away from non-club revenue streams, as these tend to be lower margin. This, combined with a disciplined approach to costs, allowed gross margins to expand by 260 basis points to 28.1 per cent during the period.
Analysts at N+1 Singer expect adjusted pre-tax profits of A$2.4m for the year ending June 2017, giving adjusted EPS of 1.1A¢ (from A$1m and 0.5A¢ in FY2016).
| MYSALE (MYSL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 116p | MARKET VALUE: | £176m | |
| TOUCH: | 116-119p | 12-MONTH HIGH: | 133p | LOW: 40p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 50A¢* | NET CASH: | A$29.1m | |
| Half-year to 31 Dec | Turnover (A$m) | Pre-tax profit (A$m) | Earnings per share (Aȼ) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 128 | -0.5 | -0.4 | nil |
| 2016 | 137 | -1.4 | -0.2 | nil |
| % change | +7 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of A$30.5m, or 20¢ a share. £1 = A$1.61 | ||||
