Beacon Lighting Group Limited (BLX) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Beacon Lighting Group Full Year FY 2024 Results. [Operator Instructions] I would now like to hand the conference over to Mr. Ian Robinson, Executive Chairman. Please go ahead.

Thank you very much. Good morning, shareholders. Thank you for joining us today as we review the financial results of the Beacon Lighting Group for the financial year 2024. I'm Ian Robinson, the Executive Chairman of Beacon Lighting. I'm joined by our CEO, Glen Robinson; and our CFO, David Speirs. Financial year 2024 presented a challenging landscape for many retail businesses with rising living costs, higher interest rates and lower consumer confidence. Despite these hurdles, our business has grown across various areas, including total sales, new store openings, increased trade sales, new trade customers, international sales and commercial sales. A key factor in the success has been in our commitment to our trade strategy, partnering with trade customers and offering them new products, competitive pricing, free delivery and the Beacon cash rebate. Putting behind the economic challenges of 2024, there's still reason to be optimistic. House prices are holding steady. Demand for new houses across Australia remains strong and appears we are nearing the peak of the interest rate cycle. The group has strong strategies for the growth of -- in our market share. I want to take a moment to sincerely thank our team for their expertise and dedication, which has consistently driven positive customers' experiences with 99% of our customers' surveyed responding that they received good or great service. Also I want to extend my gratitude to our valued customers for their continued support of our ever-evolving product range, proudly designed and developed here in Australia. Our trade customers are partnering with Beacon Lighting trade as a strong option to supply their lighting and ceiling fans and electrical accessories for Australian home projects. As outlined in Page 2 of your material, today's agenda will begin with an overview of the results from Glen Robinson, followed by detailed financial performance report from David Speirs. Glen will then discuss the growth strategy and outlook, and we'll continue with question-and-answer session later on. I'll hand over to Glen for the overview of the results.

Thank you, Ian, and warm welcome to all attendees. Let's begin by moving to Page 4, where we'll present the financial performance, starting with the statutory accounts for the year. The statutory results and the underlying results differ. In FY 2024, Beacon Lighting had a 53-week -- 53 weeks as we operate with a retail calendar compared to FY 2023, which we had the regular 52 weeks. Therefore, in the underlying results, which I will discuss on the next slide, we'll eliminate 1 week from this year's result to provide a better comparison year-on-year. I won't spend too much time on the statutory result on this page. However, from a statutory sales and profit perspective, the business was really pleased to be able to achieve a record sales result of $323 million, up from our previous record of $311.9 million set last year, representing a 3.6% increase. The gross margin was a strong result of 69% versus last year's 67.7%. We're also pleased to be able to grow our EBITDA result to $86.5 million, up 0.9% on last year. The group finished with a net profit after tax of $30.1 million, down 10.5% from last year's result. Moving to Page 5, we'll review the more comparative underlying result for FY 2024. Sales advanced to a record $317 million, up $1.6 million -- 1.6% in what would be considered a tough economic environment. It was pleasing to increase sales by $5.1 million. Sales growth came from our success in partnering with our trade customers, online sales growth and growth in Beacon Commercial and Beacon International, with some significant highlights that we'll touch on during the presentation. Gross profit was a great result for the group. Despite having a rapidly growing trade business, we were able to grow -- we were able to introduce new lines, achieve stronger economies of scale for our key trade products and build our overall gross profit from 67.7% last year to 68.9% or an increase of 120 basis points. Other income was positive throughout the year, mostly representing the income received from property investments and interest income. This grew to $2.3 million, up 54%. As expected, operating expenses were impacted by inflation and increased government charges and taxes. Base wage increase plus increases in superannuation and work cover insurances put pressure on remuneration costs. Land tax cost increases and electricity cost increases were some of the more significant lines to affect the operating expenses for the group. The underlying EBITDA result was solid, coming in at $85 million, just 0.8% down on last year's result. EBITDA as a percentage of sales was 26.8% versus last year at 27.5%. Underlying net profit after tax came in at $29.6 million, down $4 million or 12.1% from last year's $33.6 million. We thought it might be useful to show the impact of AASB 16 lease accounting standard on the profit and loss. Due to the fact that the group opened more stores this year, it does have a negative impact from the lease accounting standard on the group's net profit after tax. Excluding this standard would bring last year's profit to $32.7 million, and this year's to $29.6 million, a $3.1 million decline or 9.5% below last year. Given the group's goal is to continue to expand the store network, we thought this was important for our listeners to note. The group was also -- the group was pleased with the results. As you'll see from this presentation, a lot of progress has been made with our trade customers. We have a great network of stores across Australia. Our product development team evolves the range quickly, which means we can respond to changes in trends, technology and demand in different categories. This has allowed us to grow our market share in both the retail and trade segments of our business. We have seen the consolidation of some larger brands in our industry as well as some businesses exiting during these more difficult periods. And when we start to see a recovery in the retail consumer confidence, Beacon Lighting will be in a strong position to support both our retail and trade customers in-store and online. If we move on to Page 6, we'll talk about some underlying financial highlights. As mentioned, we're very pleased with the record sales result and very strong gross profit margin. The group finished the year with $95.7 million of inventory ready to service our trade and retail customers. This was a slight increase over the prior year. And the supply chain and our manufacturers' performances have returned to a more normal state versus what we've seen in most recent years. The group was happy to finish out the year with $46.2 million in cash versus last year's $20.7 million. Moving to Page 7, we can review the operational highlights for the year. Most significantly, the Beacon Trade business surpassed $100 million in sales for the first time this financial year. This is a big milestone to achieve, beating our own internal goals for total trade sales. Trade sales as a percentage of relevant sales finished at an impressive 36.5%, which was again above our internal targets and puts us in a strong position to achieve our 50-50 trade to retail ratio by FY 2028. We continued our discipline around what has worked well for our trade customers by offering special trade prices, Beacon cash rebates and our innovative referral rewards program for our trade customers and their referred customers. Online sales had impressive growth with our trade customers responding very strong to the Beacon Trade website with a 47% increase in trade sales. And our retail customers headed back online after a bit of a dip last year with a retail online sales increase of 11.2%. Beacon International had a slow start to the financial year, but came home strong in the second half with an 18.8% increase over the second half and 7.7% increase for the full year. We achieved an overall record sales result for the full year from the international business. We're also very happy to open up 7 new beautiful Beacon Lighting stores ready to serve our retail and trade customers in new markets. I will now hand you over to David Speirs, our CFO, to take you through the financial results in a little more detail.

Thank you, Glen. Unless otherwise stated, all the financial results discussed in the rest of the presentation will be based on a 52-week underlying result for financial year 2024. Beacon Lighting was able to achieve a $5.1 million sales increase to $317.1 million. As Glen previously stated, it has been a challenging year for our retail customers. In this environment, achieving a company store comparative sales result in line with last year was a good reflection of the hard work of the Beacon Lighting store teams. The best comparative sales results were achieved in Western Australia, New South Wales and Queensland. The continued growth in trade was one of the highlights of the financial year 2024 results. Trade sales for our stores increased by 26.8% and total trade sales as a percentage of relevant sales has now increased to 36.5%. In financial year 2024, the growth in trade sales helped to offset the decline in sales to our retail customers. Our Beacon Lighting trade website continues to be embraced by our trade customers in increasing numbers. The secured website enables our trade customers the convenience of shopping 24/7, while still enjoying the special prices rewards and Beacon cash rebates. In financial year 2024, online trade sales increased by 47%. It's pleasing to note, there were record sales achieved by the Beacon Lighting Commercial and Beacon International businesses. Gross profit on Page 10. Beacon Lighting's gross profit was a highlight and has increased to 68.9%, up 120 basis points from 67.7% last year. Despite the change in the sales mix towards trade, being vertically integrated and introducing new products has helped support the gross profit margins. Beacon Lighting has designed and developed 500 new innovative products in Australia that continue to inspire and excite retail and trade customers. This has enabled Beacon Lighting to deliver outstanding value to our retail and trade customers while still achieving a strong gross profit margin. The increased sales in our core trade products has enabled Beacon Lighting to establish new strategic partnerships with some of our trade suppliers. This has helped Beacon Lighting and our trade suppliers to grow our businesses together. This is reflected in better buying power for Beacon Lighting, further supporting our margins. Operating expenses on Page 11. Like many other businesses, Beacon Lighting has experienced inflationary cost pressures with a number of our expenses. During financial year 2024, there were noticeable increases in property outgoings, power costs, IT costs and other government charges. Beacon Lighting has continued to invest in marketing for all our businesses. There was a particular focus on trade and promoting the Beacon Trade brand across the country. Total market expenses increased by 9.9%. Selling and distribution expenses have increased by 6.1%, primarily as a result of opening new stores and the increased cost of running existing stores. There's been an underlying increase in many of our general and administration expenses with a total increase of 8% compared to last year. Depreciation has increased by 10.6%, in part the result of the recent investment in new stores and other business infrastructure. The most significant impact on depreciation has been the impact of AASB 16 lease accounting, which is detailed in Appendix 2 of this presentation. Beacon Lighting opened 7 new stores and relocated 1 store in financial year 2024. It should be noted that the most expensive day from a lease accounting perspective for a new store is the first day that a store opens. Finance costs have increased by 25% with the most significant influence on this increase related to interest costs and lease accounting. Overall, operating expenses have increased by 6.8% to be 42.8% of sales. Balance sheet. Inclusive of the term deposit, Beacon Lighting has finished the year with a strong cash balance of $46.2 million. With a more reliable supply chain, Beacon Lighting has maintained a high level of service to our customers with a good in-stock position throughout the year. The inventory balance closed at $95.7 million. Payables increased to $28.1 million and borrowings have closed with a balance of $24.2 million. The balance of the right of use assets and lease liabilities have all increased, reflecting leases for new stores, exercise options, new leases and the higher notional interest rates used for lease accounting. With the change in the balance sheet, Beacon Lighting has strengthened its net cash position. Cash flow on Page 13. Beacon Lighting's net operating cash flow has improved compared to its net profit after tax due to the increase in customer receipts, increase in depreciation, support from payables and the reduction in inventory in financial year 2024 compared to financial year 2023. Beacon Lighting has continued to invest in the future of the business with capital expenditure of $9 million and Beacon Lighting has also rewarded our shareholders with a cash dividend of $13.5 million. Dividends on Page 14. The Beacon Lighting reinvestment plan remains in place and continues to be available to all shareholders. Shares issued under this plan will be at a 5% discount to the market price. The directors have declared a fully franked dividend of $0.038 per share for half 2 financial year 2024 compared to $0.04 per share which was declared last year. For financial year 2024, the directors of Beacon Lighting have either paid or declared a fully franked dividend of $0.079 per share compared to $0.083 per share last year. The dividend payout for financial year 2024 was 59.2% which is at the top end of the ratio's guidance range which is 50% to 60% of net profit after tax. Thank you. I will now pass you back to Glen.

Thanks, David. Let's move to Page 15, where we will outline our strategic pillars of growth. Many of the listeners would be familiar with our 4 strategic pillars of growth. These have not changed over the past few years and are used continuously across the business to keep all team members accountable and aligned with our longer term goals. These pillars include, firstly, our stores where we continue to evolve our store experience creating hubs of activity for our retail and trade customers to learn and aspire to better lighting solutions. We solidify our market standing by offering exciting products and lighting design in our industry-leading showrooms with a significant store rollout potential providing future growth into the years ahead. Our trade growth pillar. Our goal is to partner with our trade which includes electricians, builders, interior designers and architects to help them and their clients benefit from greater lighting, ceiling fans and electrical accessories for their projects. Our e-commerce websites provide a seamless customer experience for both retail and trade customers. They can interact with us how they want at any time and have their orders delivered to their home or site quickly. And our new businesses and international opportunities. We're developing growth businesses that align with our strengths and leverage the product designs -- the products that we design here and develop -- designed and developed here in Australia. These products are sold through our international businesses to countries worldwide. These pillars remain the foundation of our strategy, anchoring us in delivering customer-centric results. Returning our attention to Page 16, we'll provide you with an update on our first growth pillar which is our core store operation. Beacon Lighting is uniquely positioned in the specialty lighting, ceiling fan, globes and electrical accessories category. With now 126 stores spanning all states and territories bolstered by robust logistics infrastructure and a vertically integrated supply chain encompassing design, development, manufacturing, marketing and sales, we maintain a leading role within our categories. Our commitment to delivering value to our store customers is epitomized by the engaging store experience we offer, industry-leading products, the expertise in our service and the convenience of click-and-collect and online shopping. During the year, we had a substantial new store opening program with 7 new stores and the relocation of our Cranbourne store. These new stores open the Beacon Lighting business to new markets where there was little exposure in the past. Our future total network plan remains at 195 stores. Company store comparative sales were in line with last year's results, which, given the macro economic conditions, was a solid result. We've seen flat comparative results persist for 12 months now at a point where our consumer confidence is at record lows. For us, it is all about growing our market share and offering our customers great value from new product introductions. We're confident that with a return to a more positive consumer, the stores will also see a recovery in comparative sales results. Understanding lighting is a unique skill. During the year, we completed 2,600 new lighting projects through our lighting design studios. This was an increase of 10.3% over last year. To ensure our team are experts in their field, we have developed a residential lighting designed microcredential course with Bond University and the Illuminating Engineering Society to ensure we provide our retail and trade customers with the best and most advanced lighting outcomes. Innovation and the evolution of Beacon's product range are keys to our success. During the year, the group released 500 new products all designed and developed here in Australia. During the year, the group grew our VIP club to over 1 million customers. This allows us to tailor specific product offerings and services for the benefit of our valued VIP customers and provides our VIP customers with greater discounts across certain categories. On Page 17, we'll provide an update on the trade growth pillar. Building meaningful and mutually beneficial partnerships with our trade customers is our #1 priority across the group. We continue to innovate how we interact with our trade, refining new initiatives and benefits for our trade customers and their customers. Trade benefits such as special pricing, Beacon cash rebates, new trade lines, new merchandising in store, our innovative referral program and others have all contributed to our team's success in building deeper connections with our active trade customers. We now implement trade rooms in all new stores as they are showing a good return on investment and we retrofit these rooms into existing stores where the space is available. During the year, we increased the number of members of our trade program by 17%. Total trade sales exceeded a key milestone of $100 million and grew total trade sales in stores by 26.8%. Our commercial business which mostly sells to the volume residential builders increased sales by a solid 14.3%. The group finished the year with trade sales ratio to relevant sales of 36.5%, which, as mentioned, was above our internal targets. We're well on our way towards our goal of a 50-50 trade to retail sales ratio by 2028. On Page 18, we'll focus on our e-commerce growth pillar. Beacon Lighting now operates 16 websites catering to various brands and sales channels within the group. Our core websites are beaconlighting.com.au and beacontrade.com.au. Online sales for the year recovered well from last year with retail sales online growing by 11.2% and now representing 11.8% of total retail sales. Our Beacon Trade website experienced exceptional growth once again with online trade sales increasing by 47% and visitations by 42%. The trade website is proving popular due to the ease of getting what the trade wants at their prices and delivered free to site in many cases on the same day. The other benefit is that their purchases are all electronically filed on their own web account, making it easier for them to bill and to reconcile. Moving to Page 19, we'll turn our attention to the final strategic growth pillar being new businesses. Our new businesses offer exciting opportunities for diversification beyond our retail trade and e-commerce core. These emerging ventures allow us to invest, learn, develop and foster growth for the future. Beacon International, which predominantly sells ceiling fans, had a very strong second half as the Northern Hemisphere entered its summer season. Second half sales increased by 18.8% over the prior period and the international business grew its total sales for the year by 7.7%. The results for the Beacon International business were not consistent in the regions where we operate. The Hong Kong business, which sells mostly in container lots to countries worldwide was the most successful with strong sales growth. Our European operation had moderate growth whereas our U.S. business proved more challenging with a sales decline. Custom Lighting, Masson for Light, Connected Light Solutions and Light Source Solutions found it hard to cycle the growth that they achieved last year and all had sales declines. The group currently holds a 50% stake in 7 retail property sites within Australia aligned with our strategy to enhance ownership of our operational [ sites ]. Sustainability on Page 20. Beacon Lighting Group believes that businesses can play a significant role in positively influencing the environment. As the leading lighting supplier in Australia, we have spent the last decade committed to reducing our environmental impact through various operational initiatives. Our sustainability objectives focus on 3 key areas: our people, product and planet. Some of the milestones worth mentioning are: under the people area, it would be that we believe in our team and their career advancements, preferring to promote and build strong careers from within. Throughout the year, we were able to promote 138 team members. For products, the products that we bring to market can have a massive impact on our customers' energy use. With the development of light emitting diodes, we have reduced energy usage in lighting by over 80%. And for the planet, Beacon was one of the first retail and trade businesses to adopt large-scale solar systems to offset our energy use. We are proud to now have 64 large-scale solar systems across our store network. For more details on commitments to sustainability, please refer to our annual report and our corporate website. We can review the financial year 2025 Beacon Lighting Group outlook on Page 22. Trading momentum from FY 2024 has continued into FY 2025. Partnering with electricians, builders, architects and interior designers continues to be our #1 priority for the group. Beacon Trade's positive sales momentum has also continued into FY 2025. Our commitment to our team continues with a new program of trade sales training commencing across the group in August 2024. After a strong positive vote in favor of our new enterprise agreement from our team, we will implement the EA benefits including the new Beacon Team Share Plan in financial year 2025. Our product design team based here in Melbourne have planned an exciting release of new products both for retail and trade customers in the year ahead. The group looks forward to opening 5 new stores in FY 2025 at Auburn, Port Stephens, Shepparton, Chatswood and Ballina. And we'll relocate the New South Wales support office and commercial operations to Auburn and our Bendigo store will be developed into a new site which will serve that market well. We continue to pursue growth in the international markets with Australian-designed fans and lighting products in North America, Asia and Europe. I'd like to say thank you to our team and customers for FY 2024 and we're looking forward to an exciting year ahead. Thank you for your time and I'll now hand you back to Ian Robinson to address any questions you have.

Thank you, Glen and David, for your presentations. Ladies and gentlemen, we're now open for questions.

[Operator Instructions] Your first question comes from Alexander Mees with Morgans.

Well done, team, on a very resilient performance. I'm just wondering about retail demand. You obviously positioned the company well to benefit from recovery in demand. Just wonder if you're seeing any green shoots of recovery at this stage?

Yes, thanks Alex. Look, I think what we've said in the outlook statement is we've seen continuation of what we've seen from FY 2024. Look, we're reasonably optimistic. When you have a look at the graphs around consumer sentiment, it's about as low as it gets and we've performed relatively well in that environment, albeit we would like a little bit more growth. I think things will have to [ recover ] as we start to see stabilization or reduction in interest rates. I think we'll continue to see some stronger performance from the consumer. In the interim, we're obviously focused on our trade customer and doing what we can to activate as many sales for our general consumers. But yes, we are optimistic. We've positioned the business in the right area and I think we've also seen quite a number of our competitors in quite a bit of pressure and that will obviously allow us to grow our market share during these tougher times for the consumer out there in Australia.

Alex, I think another way of looking at it is really to say that we're less concerned about deterioration of sales and we're looking forward to the possibility of increased momentum in the sales.

Excellent. And then just on gross margins, really good performance on gross margins, given the change in mix with trade growing as strongly as it is. Just wondering, what's caused that? Is it simply better buying power as you mentioned earlier, lower freight costs? And I suppose, can you sustain those margins into FY '25?

Yes, I think that's right. We've had a relatively stable Aussie to U.S. dollar conversion, which has helped. We've been negotiating pretty strongly with some of the suppliers that we have particularly on trade products, where we're going through a lot more quantity than what we probably were over the last couple of years. So that has definitely helped from a cost point of view. And the pricing stability coming out of China is relatively good as well, so we're not seeing lots of fluctuations there. We will potentially see a little bit of impact from freight cost increases but I don't see that being a major hurdle for us. I think the other thing that we've been concentrating on across the group is pricing disciplines. We really focus on, we either have a promotional price for our retail customers or we have a trade price for our trade customers and really the discipline around sticking to those prices has been a lot stronger adhered to over the last 12 months to 18 months, so that's definitely helped our margins as well.

Great. If I could just maybe sneak one more, quick one in, just with regard to the international business. Great to see Hong Kong and obviously, worldwide sales doing as well as they are. Just wondering about the U.S. though, what's going on to cause that still to be negative?

Yes, it's still a pretty tough market in the U.S. And like you said, we're really pleased with the Hong Kong business and even Europe, they had growth there, but the U.S. business is still particularly tough. We've seen reductions in sales really in that business for about 2 years now, and a lot of it has been around the e-commerce channels. So we are starting to see slight recoveries in that. We've got a new team member on board that's going to look after the retail channel for us so that our e-commerce person can focus really just on the e-commerce area of the business. And we've really only just started our push into Home Depot as well. So we've just got the trial rolling out at the moment in August for some of our ceiling fans into Home Depot. So there are still a lot of things to be positive about, but it certainly has been pretty tough over the last 12 to 18 months for that one section of the international business.

Your next question comes from Kseniya Chadayeva with Jarden.

Could you please quantify cost increases moving forward? So where do you still expect pressure? Anything -- and anything you can do to offset that?

Cost pressures, I think that's you, David.

Thank you, Glen. Yes, I think we're still seeing some cost pressures around the place, but we are looking at some things we can manage. Obviously, the store teams were very focused on trying to get productivity gains out of the stores, and that's by removing some of their workload. And we've done that in parts of their work. We're also looking at things like insurance renewals and really trying to be a lot smarter about what we do to reinsure and what we actually sort of manage the risk ourselves. So there's those sorts of things that we do focus on and also rostering, that's a continual focus within the group. We are making sure that our store teams are there to serve our customers when they need to be served and not at other times of the day. So these are some of the things that we are working very hard on to help manage our expenses moving forward.

And I think, Kseniya, we've sort of -- we have seen a bit of a step-up in certain areas across our cost side of the business. What we usually find is they step up and then they stabilize. And I wouldn't expect to probably see some of the big step-ups that we have seen over the last 18 months to 2 years to continue into FY 2025. Inflation is getting a bit more under control. Expectations are that we should be able to bargain a bit harder on certain things from the cost side, and that's what we'll be intending to do for the year ahead. We do need to see some of those costs that are coming through reduced or at least stabilize. I would expect that to happen throughout the year.

Right. And on trade growth you had, how much of that is driven by club members versus -- and repeat customers versus new?

Yes. So I think our trade member growth was 17%. So member growth was up 17%. But let's take -- so in-store growth was up 26%. So we are getting more active customers shopping more frequently and spending at higher rates. And that has been a big focus of ours over the past 12 months with what we call internally our SMaC recipe. It's a discipline around how we contact customers and follow them up. But also coming into this financial year 2025, we've got a real -- an additional discipline around our unique active customers and that's an area of focus for us to make sure that we are still growing our membership base, but also making sure we're servicing our customers and keeping them as active as possible [Technical difficulty].

And I think you mentioned you released around 500 products this year. And is that like a new normal? Is that the same amount you expect to release next year?

Generally speaking, we are usually above 500. So it was about an average sort of level, but we are looking at this year, probably having about 650 new products for FY 2025. A lot of these products have already been worked on for the last sort of 12 months or so. So we've got a pretty clear indication of what the pipeline looks like. And that's exciting for us because it cuts across both retail and trade customers to help support those margins and bring something new to the market that's unique, differentiated from our competitors. And obviously, it's a new and unique product. We can usually excite our customers and achieve some decent margins out of those products.

Your next question comes from Aryan Norozi with Barrenjoey.

Just one for me on the gross margin side. I mean the second half '24 was about 68.6%. You sort of alluded to some of the moving parts in fiscal '25. But I think, last result, you sort of mentioned 68% to 69% is the way you want to manage that gross margin moving forward. Is that still the aim, like 68% to 69% for fiscal '25 and '26?

Yes. I think what we're seeing at the moment, Ari, is that we're able to manage it in that area. Nothing is guaranteed, of course, in life. But we have grown our trade base significantly. And if we continue to see a relatively stable U.S. dollar, freight costs don't impact us greatly, then that's what we would probably intend on looking to try to achieve.

Great. And the trade sales that are coming through, what gross -- like, can you just run us through just the difference in the gross margin between those trade sales and retail? Because trade is obviously dilutionary but not as much as what people might think, maybe just that dilution and how we should think about that moving forward as you grow into trade accessories and other categories, please?

Yes, you're right. I mean, look, I think a lot of people think that trade sales are necessarily going to be having a big hit on your margin. And we have always said, if we're selling more cable products, basic trade lines, then it might affect our margin a bit more than what we've probably seen so far. I guess the unique thing about Beacon Lighting is that we are a vertically integrated business. And the products that we are selling are not available anywhere else in Australia. So those same products, some of them are sold to retail customers, some of them are sold to trade customers, some are sold exclusively to trade customers, and we're able to achieve good margins even from our trade customers. So without going exclusively into the exact numbers, you're only talking maybe a couple of 100 basis points below where the average retail margin would be.

And I think it's been a bit of a surprise really for us that the trade margins have been higher. And part of the recognition of that is the trade will buy a product that's better quality and more exciting as well. So they're not just buying generic low-margin product, but they embrace the full range.

Yes, perfect. And just in terms of the comps, I appreciate -- apologies, this is short term, but is it fair to say the comps that you're cycling for the rest of this half get tougher? Because I recall last year, you had obviously a really good ceiling fans season and actually things picked up in October, November, December. Is that a fair comment? Or is it just numbers are all skewed because of timing of COVID and what not?

I don't think we've had a good ceiling fan season for quite some time.

Yes. It wasn't super exciting last year from a ceiling fan perspective. It was okay, though, and probably it was better than the prior year. We started out last year, FY 2023 first quarter, pretty soft. And then we definitely did improve in the second quarter. So that's what we will be going through and cycling that again.

Okay. Because I think -- is it fair to say like same time last year in July, August '23, you were cycling sort of negative 5% comps, negative -- is that fair? Like -- and then you closed the year half at flat? Is that what you're sort of referring to? Or...

Yes. I think July and August started out pretty soft last year, without going into specifics. And then things improved a bit in September, October. November was okay, and December was okay.

Perfect. Last one, please. Just on the trade sales, what did the total trade sales grow by in FY '24? I think you mentioned trade store sales grew 27%. And I think in first half '24, the total trade pie grew 23%. I'm just trying to make sure we're using the right -- are those 2 numbers comparable or -- yes?

Total trade sales, which includes all relevant sales increased by 21.6%. That does include...

Perfect. Okay. So that's comparable to the 23% in the first half of '24.

That's right, yes, that's total relevant sales. That's right, yes.

Your next question comes from Stewart Oldfield with Field Research.

Just a couple of questions. Glen, you made a reference to consumer sentiment being as low as it can get, and there's been some businesses exiting in the industry and some consolidations. So can you give us sort of -- what sort of market share you think might be up for grabs? You expect more exits from the industry?

Yes. I think we're seeing it pretty tough out there at the moment, both across the retail sector and also the trade sector. There has been a fairly significant trade supplier go under just in recent months. And look, I don't know what their total sales were, they were unlisted business. So I'm not sure what's up for grabs in that business. But we have also seen smaller independent buying stores finding it particularly hard and deciding to exit the market as well. So there's small bits and pieces around that we can hopefully grab a bit more market share. And these are the times to do it. Obviously, it's -- in a really big market, it's hard to grow market share, but we're in a really strong position. We've got a dominant store network of 126 stores. And with our relatively small market share of trade, that's a great opportunity for us. And I think we've probably seen over the last few years that some of the trade operators, and when I talk about trade, I'm talking mostly about electrical wholesalers, they had been performing pretty well over the last couple of years. But definitely, from what we understand, seen a bit of a pullback over the past year in FY 2024. And we've still been able to advance our trade sales quite significantly. And we are a small player, but hopefully taking some of that market share.

There has been quite a substantial change in the wholesaling operation as well. There's been, I think over the last 3 years, quite a lot of consolidation in that supply channel, which is really in the basics area, which really opens up for us with having a more exciting range that they continue really just to focus on generic low-cost margin stuff where we can get the extra sales by having more exciting products, which generally give us a high gross margin.

Yes. So that specifically is a couple of the larger importers, were purchased by another group here, a wholesale group that sells predominantly to Bunnings, which actually probably suits us quite well. It takes out these other importers that would usually have sold to independent lighting stores. And as soon as they start to sell prominently to Bunnings, the independent lighting stores don't really want to support them and the electrical wholesalers don't really want to support them. So the options for lighting from a wholesale point of view have become quite a bit narrower over the last couple of years.

Got it. Got it. And just the 195 store count target, you last reviewed it in March last year, Australia's population's heading for a million additional people by now. So would you review that target at some point?

Yes. We normally would review it every probably 2 or 3 years. But every time we do the research, we always have more stores, again, because of population growth and also, I think, the propensity for the homeowner to spend in their home in the lighting category. So that always grows every time we do the research.

The population growth by itself is equivalent to about 5 new stores per year. So it's -- population growth is important for a lot of it, for us for new stores.

Your next question comes from Emily Reynolds with Citi.

So just on a similar vein to what you were just talking about in terms of sites. You've noted in your presentation a handful of meaningful locations for the year ahead. But would just love a quick comment on, firstly, site availability more broadly. And secondly, if there's been any thought or consideration in exploring trade-only stores to kind of remove that need for larger format retail sites?

I think we've been very -- yes, we've done very well to be able to put 4 -- 7 stores up this year plus a couple of -- 1 relocation. And we're very comfortable with being able to put 5 stores or 6 stores up per year, and we've definitely got 5 for next year -- for this financial year. And we've got strong indications that we'll be able to continue with that kind of rollout for '26 as well. So look, it's not easy, but the sites are available. And I think the other big change for Beacon Lighting is that we've really lifted the brand presentation by the quality of the new store locations we've got. These are generally something that's quite unique in an architectural presentation. And you have to do something exciting to get the customers into your store and get your trade and your interior designers and architects and people to get excited about the product. And I think we've advanced the brand substantially by a better quality of presentation.

And I think what we've also learned, Emily, is that, yes, the sites are available. We've got great contacts across the industry to be able to learn where those new sites are popping up and when people might be vacating sites, we can go in there. But we've also -- we also know that Beacon Lighting can do stand-alone sites. We don't have to be in centers. And some of our most successful stores are actually in stand-alone sites where the rent cost is usually a lot lower. And that's where you then start to open up your mind to whether, in the future, we'll have, as you mentioned, trade-specific sites or it might be a trade-specific site, but still has a little bit of a retail-type front on it as well. That's definitely something in our consideration at the moment. Some of the costs to go into some of these larger -- large format retail centers have increased quite a bit over the last couple of years and knowing what we can get out of a stand-alone site and the lower rental cost, it definitely makes for a pretty exciting option for us.

There are no further questions at this time. I will hand back to Mr. Robinson for closing remarks.

Okay. Thank you, ladies and gentlemen, for your interest in Beacon Lighting, and we look forward to updating you further in the future.

Thank you.