If you love strolling through renovation showrooms like those run by Bedshed and Kitchen Connection but don’t want to physically do the upgrades yourself, it could soon be much easier to have them done for you with Joyce Corporation (ASX: JYC) set to launch a new services business that will complement their aforementioned showrooms.
While remaining tight-lipped about the details of the new business, Joyce has flagged it as “a service-focused initiative helping homeowners add value to their greatest asset – the family home”.
The launch of the new business aims to create new revenue opportunities for Joyce which continues to be adversely affected by the lingering effects of COVID-19. Initially damned by mass lockdowns which halted any foot traffic through their Bedshed and Kitchen Connection stores, the Company is now being impacted by rising labour expenses and supply chain disruptions. These have resulted in reduced showroom traffic, as well as delays in order delivery of which Joyce has an Order Book value of $60m that needs to be delivered to its customers from their KWB Group division – KWB Group – Kitchen Connection, Wardrobe Connection and Wallspan.
“As signalled last year, we are now looking to apply our existing expertise into a complementary, organically grown new business that has a limited capital requirement, is relatively low risk and which we believe has significant growth potential,” said Joyce CEO, Dan Madden.
“The new business is planned to launch as a Pilot in Perth in the first quarter of the 2023 financial year and we anticipate that it will be the first step in the development of a new brand with strong long term growth potential into close, adjacent natural opportunities.”
Floods across Queensland and New South Wales have also impacted trade with one showroom in Windsor to be shut down with no re-opening date set.
In light of these disruptions, Joyce has continued to expand its national footprint of kitchen and bedroom stores through both Company-owned sites and its franchise model.
New sites located in Alexandria, NSW and Ballarat, Vic will take Joyce’s franchise footprint to 36 Bedshed locations around Australia.
The new business pilot program will have $5.4m cash set aside for its launch, just a fraction of the $28m on hand as of April 2022. Further funding will be assigned to the new service-focused business pending proceeds from the sale of Joyce’s Osborne Park premises.
For the half year ended 31 December 2022, Joyce Corporation reported $61.5m in revenue which represented a 16% increase on the previous corresponding period. This delivered $6.7m net profit after tax, a 12% decrease which resulted due to the absence of JobKeeper payments which had subsidised revenue through the peak of COVID-19.
The Company distributed a fully-franked interim dividend of 7.5 cents per share.
“Our business is in a strong position with operations performing well and at a consistently high level. We have a great value proposition to our customers, franchisees, suppliers and employees, and we are well placed to continue to grow sustainably through 2022 and beyond whilst maintaining healthy dividends to our shareholders,” added Madden.
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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