Furniture trader Nick Scali has posted an uptick in interim profit, but lengthy closures for its refurbished UK stores dragged on the result.
Its bottom-line net profit for the six months ended December rose 36.4 per cent to $41 million, from the previous first half, supported by solid sales growth in its Australia and New Zealand stores.
Revenue for the home team, including NZ, grew 13.1 per cent to $251.7 million, as its gross profit margin rose 150 basis points to 65.9 per cent.
But its UK business has still to turn a profit, after posting a first-half net loss in line with forecasts at $5.6 million, due to lengthy closures as it refurbished and rebranded stores.
“The first half delivered solid sales and profit growth in ANZ (Australian & NZ) with good progress made in the UK as the completion of store refurbishments and rebranding contributed to improvement in written sales orders,” chief executive Anthony Scali said.
The company received UK revenues of $17.6 million, down from $28.6 million in the previous first half.
Despite the closures, British written sales orders for the half grew 12.8 per cent to $21.7 million, in an encouraging sign for its UK foray, while gross margin grew sharply to 59.2 per cent.
The geographical spread of the UK stores also led to some inefficient marketing and advertising spending, Mr Scali told investors during an earnings briefing on Friday.
“We’ve only got 16 stores and they’re spread across the UK, so there’s not a lot of opportunity for localised advertising,” he said.
“It’s mainly national.”
The company is aggressively pursuing more UK stores to open in the short term, with several in negotiations.
Six new locations are set to open in the company’s Australasian heartlands in 2026.
“New stores are critical for our profit growth, as is increased brand awareness,” Mr Scali said.
While the overall first half profit beat expectations, investors were less optimistic, selling down Nick Scali shares by more than 17 per cent to $19.71 in the first hour of trade.
This was likely due to weaker-than-expected January sales growth in its Australia and NZ stores of about three per cent.
The company declared a fully franked first-half dividend of 39 cents per share, up 30 per cent on last year.
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