Nick Scali (ASX:NCK) used its first-half results presentation to highlight higher sales and profit in Australia and New Zealand alongside continued progress in the U.K. rebrand program, which management said is beginning to show improving sales trends despite disruption from store refurbishments and closures.
First-half results: revenue and profit growth
Managing Director Anthony Scali said first-half revenue rose 13% versus the prior year to AUD 251.7 million. He reported first-half gross profit margin of 61.5%.
The company reported cash and bank deposits of AUD 91.6 million and declared an interim dividend of 39 cents per share.
Written sales trends and revenue drivers
On trading momentum, Scali said group written sales were up 10.5% on the prior period, with like-for-like written sales orders up 10.1%. Group written sales orders totaled AUD 256 million, up 10.7%.
He attributed the uplift in reported revenue in part to strong written sales in May and June, and said the company saw “a strong first quarter” in FY2026. The ANZ like-for-like revenue result for the half was cited as 12.7%.
U.K. rebrand and trading update
In the U.K., Scali said first-half revenue was GBP 17.6 million and noted performance was impacted by store closures related to the rebranding program. Written orders in the U.K. were reported at GBP 21 million, up 8% on the prior comparable half, though management emphasized the year-on-year comparison was affected by numerous refurbishment-related closures.
Scali said 16 stores had been refurbished and rebranded as Nick Scali by December. He also said sales orders continued to improve as stores were rebranded, citing that four rebranded stores showed 32% like-for-like growth in January 2025.
The company reported a loss after tax of AUD 5.6 million in the U.K., which Scali said was “as per forecast.”
Scali also discussed the path to profitability in the U.K., stating that break-even is around GBP 51 million in sales revenue and that new stores are “critical” to driving brand awareness. He said the Lincoln store was closed because it was not suitable to rebrand, and that optimization of the U.K. network was “mostly complete,” with 16 stores converted to the mixed branding and product range. He added that a number of new store locations were under consideration.
Margins, costs, and operational initiatives
On group profitability, management said gross profit margin was 65.9% compared with 64.4% in the prior year period, while operating expenses increased by 5%, mainly due to employment bonuses and additional marketing “in line with sales growth.” Scali also referenced the clearing of a “legacy” product line and said operating leverage continued to improve.
For the U.K., the company discussed gross margin improvement, referencing 59.2% and noting the reported margin was impacted by interest-free subsidy costs. Scali said distribution restructuring was underway to reduce “margin leakage,” and that further consolidation of U.K. head-office roles with Australia was intended to drive efficiency. He also said new product introductions based on Australian performance would become the norm in the U.K.
During Q&A, Scali said the strong margin performance did not impact promotional activity. On foreign exchange, he said any potential benefit from currency would likely be seen in the first half of the next financial year, adding that in a competitive environment the company may pass benefits on through promotion.
Cash flow, balance sheet, and store rollout commentary
Chief Financial Officer Kylie Archer said cash generated after deducting amounts due on operating leases was AUD 51.5 million for the half, with ANZ contributing AUD 53.4 million. She said the operational funding requirements decreased as refurbishments were completed, with a net operating cash outflow to the U.K. of AUD 1.9 million.
Archer detailed two property purchases during the period: AUD 3.8 million for land in South Australia (with construction due to commence in the calendar year) and AUD 7.9 million for a second purchase. She said AUD 28.2 million was returned to shareholders via the final FY2025 dividend, and that closing net cash at the end of December was AUD 91.6 million versus AUD 15.9 million a year earlier.
Inventory levels were described as broadly consistent and “slightly down” versus June 2025 levels. Archer said borrowings were unchanged at AUD 74.3 million, with AUD 43.7 million related to a 30% loan-to-value ratio.
On store rollout, Scali said a new Plush Home store was opened in November 2025 in Bendigo and that additional openings were planned. He also said that, with refurbishment activity in the U.K. mostly complete, focus would turn to improving sales performance and expanding the footprint.
In Q&A, management said January trading reflected improving store performance but cautioned that promotional timing, forward ordering, and interest rates could influence monthly results. Scali said the company does not “call out” the order bank, but noted lead times had improved modestly and product was being delivered “a little bit quicker.” He added that marketing investment is managed month-to-month based on store traffic and promotional opportunities.
About Nick Scali (ASX:NCK)
Nick Scali Limited, together with its subsidiaries, engages in sourcing and retailing of household furniture and related accessories in Australia and New Zealand. It offers sofas and armchairs; TV and entertainment units; coffee, side, and console and hallway tables; dinning tables and chairs, and buffet tables and sideboards; mattresses, bed frames, bedside tables, tallboy, and dressers; and rugs, mirrors, and lighting. The company provides its products through a network of stores in Australia and New Zealand, as well as online.
