Today candles, fragrance, and décor retailer Dusk Group [ASX:DSK] released a trading update and detailed expectations for the 2023 financial year’s sales and earnings.
Ultimately, the group has lowered its expectations for FY23, dropping its guidance range from $138.4 million in sales to the range of $135–137 million.
Pro forma earnings also dropped from an anticipated $26.5 million last year to $16–17 million.
DSK shares fell 2% in the morning trade after the update, worth $1.51 each early Friday.
In the past 12 months the candle maker’s stock has sunk 28%:
Source: tradingview.com
Dusk’s nine-month trading update and FY23 guidance
Earlier this morning, the candle and scents retailer said it completed 45 weeks of the financial year and gathered unaudited managed accounts to the end of April 2023.
With this information, the group believes its expected guidance for the 2023 financial years’ sales and earnings before internet and tax (EBIT) will be less positive than in FY22.
Dusk now says it expects pro forma EBIT to end in the range of between $16–17 million for the 2023 financial year, with sales expected to hit between $135–137 million.
This is a lowered guidance on both accounts as sales were anticipated to be more in the area of $138.4 million in FY22 — pro forma EBIT expectations were previously much higher at $26.5 million in FY22.
However, Dusk did share that it still expects the gross margin rate for the full financial year to remain broadly in line with initial expectations.
The group pointed out that its full expected results for fiscal 2023 remain ahead of pre-COVID levels, despite the represented total sales and pro forma EBIT produced by the group over the last four years:
Source: DSK
The group’s CEO and managing director, Mr Peter King, explained that the group has now brought a fall in sales and profits expectations for fiscal 2022, mostly due to tough trading conditions.
He points out that consumers have become ever more cautious about finding ways to navigate increasing interest rates and the ongoing cost of living pressures, which will have quite an impact on discretionary spending.
Mr King said:
‘Trading conditions in the second half of FY23 have been impacted by an increasingly cautious consumer environment, driven by higher interest rates and mounting cost of living pressures impacting the disposable income levels of our core customer.
‘Our key Mother’s Day period was softer than anticipated, which compounds the trend of subdued and volatile sales observed over the course of this calendar year so far.
‘Our total sales and Pro Forma EBIT in FY23 will still be well ahead of pre-COVID levels, and the EBIT margin in FY23 of around 12% is solid. However, many consumers are feeling significant strain on their household budget, and we are taking the actions necessary to mitigate the financial impact of this difficult environment continuing.’
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