Background: Nick Scali started way back in 1962, and sells all things furniture (think lounges, dining tables, coffee tables, lamps etc). And while for some industries, COVID has been an absolute curse (i.e. travel), for others...it's been a blessing.

What happened: It turns out the home furniture space has been booming. Every single person realised how disgusting their couch was after lying on it for the past 18 months...or just decided to spruce up their home office.

What else: Nick Scali's laughing all the way to the bank. Their profit doubled to over $84 million in the last 12 months, and now they've acquired soft retailer Plush-Think for $103 million in an accretive acquisition.

So what's the key learning?

💡An accretive acquisition is when a company - like Nick Scali - acquires another company - like Plush - and the deal increases the company's earnings per share (aka, the company's earnings divided by the number of outstanding shares).

💡These type of accretive acquisitions are usually pretty good for a company's share price. All of a sudden, Nick Scali's earnings go from around $84 million...to over $110 million.

💡With no new shares being created, there are now more earnings per each outstanding share. So it makes sense that investors love these kinds of acquisitions. In fact, Nick Scali's share price increased by more than 10% on the news.