While the hugely lucrative business of selling candles at premium prices remains viable, it may not be for much longer given then reliance of in-store experiences to make such purchases which resulted in a 12% drop in revenue for candle retailer dusk Group (ASX: DSK).
Pandemic lockdowns have been a hindrance for most retailers but despite operating an online store that delivers nationwide, dusk looks to have found the one product that Aussies are not keen to buy online.
This resulted in a 12% fall in sales revenue for the Half Year to $80.0 million, down from $90.9m last year. Online sales grew 2.8% but this was not enough to offset the 13.4% decline on in-store sales where the Company attributed the loss of sales to reduced foot traffic throughout the retail holiday season.
“Given the circumstances faced during the half, there is much to be pleased about in the overall result delivered, especially having regard to the fact we cycled exceptional LFL (like-for-like) sales growth from the prior corresponding period,” said dusk Group CEO, Peter Kink.
“We remain focused on our customer and strategic priorities, and have made tangible progress on our growth strategies, including continued store roll out in Australia, preparing to commence operations in New Zealand, and the acquisition of Eroma”.
Despite the drop in sales, dusk still remained profitable at the bottom line to report $15.1m net profit after tax, a 10.1% decline on the previous year but highlighting the powerful margins that sticks of wax can deliver.
Shareholders have been rewarded with a 10 cents per share interim dividend, down from 15 cents distributed last year.
Although sales have struggled, dusk has found a unique price point for brand membership with the Company reporting 13.9% more members to their dusk Rewards program with there now being 718,000 Australians paying $10 for a 2-year membership. These candle enthusiasts accounted for 62% of total sales and continue to be the primary segment of dusk customers across its retail network of 128 stores.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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