Retail update: Beacon Lighting

Following Beacon Lighting's recent annual general meeting, chief executive Glen Robinson said he is optimistic about growth as housing construction and renovation rebounds from lock­downs, promising a strong sales pipeline. However, he believes robust consumer spending since the pandemic began will start to fade away as rate rises rein in discretionary spending.

With 119 stores in its network, Beacon Lighting will continue to push into the trade market and remain focused on its growing North American operations. In The Australian, Mr Robinson said:

At the end of the day, if you are building or developing a house, doing a renovation, you have got to eventually put the light fitting at the end of a wire. You can have discretion whether you want to go for something cheap or something more expensive, but we offer both.

I think we are enjoying those times at the moment. We are usually at the end of the project, we are late cycle, and that is seeing us through pretty well at the moment.

He added there was a "massive backlog" in construction.

Mr Robinson said same-store sales had been encouraging since the start of the new financial year, although year-on-year sales might moderate as the lighting speciality retailer cycled very strong 2022 sales.

I think probably looking at other retailers, we are doing well. We are pretty confident at the moment, but we are heading into a (federal) budget period, there is inflation, and we've got to be cautious.

He also said inflation and higher rates would slow discretionary spending.

The reality is that is bound to happen, things will probably have to slow down a bit, but there are still a lot of (housing) developments that have to be done. Discretionary might slow down a bit, as interest rates tighten, but people still have to finish their projects and there is still a good pipeline there.

Background

In August, Beacon Lighting posted record annual sales and profits, helped by its US business and the new division that caters to trade professionals.

Its annual revenue had risen 5.4% to $304.3 million. Profit lifted by 8.2% to $40.726 million, a record, as it opened five new stores in the period and saw strong growth for its recently established Beacon USA business, which booked a 51.9% rise in sales for the year.

Beacon said its new initiatives for trades saw a 22.3% lift in sales. At the time, Mr Robinson said:

Supporting our trade customers and growing trade sales remained Beacon Lighting's number one objective in fiscal 2022. Our trade customers responded very well to the various trade strategies, which resulted in strong growth in trade club members, trade sales and online visitations to the trade website.

Total online sales up 31.3% to $34.1 million, which included an increase in Trade Club online sales of 67.6%.

Related

Beacon Lighting's first half results - HNN Flash #78, January 2022

Source: The Australian