Furniture seller sets the table with revenue boost
Furniture trader Nick Scali reported a rise in interim profit, but the result was hurt by the prolonged closure of its refurbished UK stores.
Its net profit for the six months ending December rose 36.4 percent to $41 million from the previous first half, supported by strong sales growth at its Australian and New Zealand stores.
Home team revenue, including New Zealand, rose 13.1 percent to $251.7 million, while gross margin rose 150 basis points to 65.9 percent.
But the UK business still has to turn a profit after posting a first-half net loss of $5.6 million, in line with forecasts, due to extended closures while it refurbished and rebranded stores.
“Solid sales and profit growth were delivered in ANZ (Australia and New Zealand) in the first half, with good progress made in the UK, with completion of store refurbishments and rebranding contributing to an improvement in written sales orders,” Chief Executive Anthony Scali said.
The company’s revenue in the United Kingdom fell to $17.6 million from $28.6 million in the first half of the previous year.
Despite the closures, UK half-written sales orders rose 12.8 percent to $21.7 million; this was an encouraging sign for entry into England; gross profit margin rose sharply to 59.2 percent.
Speaking to investors at Friday’s earnings briefing, Mr Scali said the geographical distribution of stores in the UK had led to some inefficient marketing and advertising spend.
“We only have 16 stores and they are scattered all over the UK so there aren’t many opportunities for localized advertising,” he said.
“This is mostly national.”
The company is working aggressively to open more stores in the UK in the short term, and discussions are ongoing with many of them.
Six new locations will open at the company’s Australasian headquarters in 2026.
“New stores, as well as increased brand awareness, are critical to our profit growth,” Mr. Scali said.
While overall first-half profit beat expectations, investors were less optimistic, selling Nick Scali shares down more than 17 percent to $19.71 in the first hour of trading.
This was likely due to weaker-than-expected January sales growth of 3 percent at Australian and New Zealand stores.
The company announced a fully-fledged first-half dividend of 39 cents per share, up 30 percent from last year.
