Nick Scali FY25: Revenue Hits $495m, Profit Falls 28% Amid UK Costs

Revenue Growth Masks Profit Pressure

Nick Scali Limited has delivered a mixed FY25 result, with revenue climbing 5.8% to $495.3 million, buoyed by the full-year contribution from its UK acquisition, Anglia Home Furnishings Limited. However, the headline net profit after tax tumbled 28.4% to $57.7 million, reflecting significant one-off restructuring costs and operational disruptions.

The underlying net profit, which excludes $2.4 million in UK restructuring expenses and $2.8 million related to a freight forwarder failure in Australia and New Zealand (ANZ), also fell sharply by 24.5% to $62.0 million. Earnings per share dropped 31.5% to 67.5 cents, underscoring the profit squeeze despite top-line growth.

UK Expansion Challenges and ANZ Stability

The UK segment, acquired in May 2024, contributed $41.8 million in revenue for the full year, a substantial increase from $8.3 million in the prior partial year. Yet, it recorded a loss of $13.7 million, driven by showroom refurbishments and integration costs as the company rebrands Anglia Home Furnishings stores to Nick Scali Furniture.

Meanwhile, the ANZ business saw a slight revenue decline to $453.5 million from $459.9 million, with gross margins softening by 1% to 65%. The freight forwarder failure caused $2.8 million in detention and demurrage fees, disrupting supply chains and adding to operating costs. Despite these headwinds, ANZ underlying net profit remained robust at $73.2 million, down from $83.5 million excluding one-off logistics expenses.

Strong Balance Sheet and Dividend Commitment

Nick Scali maintained a strong liquidity position with $101 million in cash and term deposits and a net cash position of $29.3 million at year-end. Capital expenditure of $13.6 million included $4.6 million for UK showroom refurbishments, signaling ongoing investment in growth markets.

The Board declared a fully franked final dividend of 33 cents per share, consistent with the prior year’s final dividend, reflecting confidence in the company’s cash flow and commitment to shareholder returns despite profit pressures.

Governance, Remuneration, and Risk Management

The company’s governance framework remains robust, with an unqualified audit opinion from KPMG. Executive remuneration aligns with performance, combining fixed salary, short-term incentives linked to profit targets, and long-term incentives based on earnings per share growth. The Board continues to monitor risks including economic conditions, cyber security, and integration challenges.

Nick Scali is also preparing for upcoming mandatory climate-related financial disclosures, although it currently assesses climate risks as not materially impacting operations.

Outlook and Market Positioning

Looking ahead, the company expects continued revenue growth in ANZ, with July 2025 sales up 7.7% year-on-year and plans to open five new stores in FY26. UK losses are anticipated to persist until showroom refurbishments are complete and sales improve. The company’s strong balance sheet and strategic investments position it to navigate these challenges while pursuing long-term growth.