Nick Scali Posts $41M Profit on $269M Revenue, Up 7.2% H1 FY26

• Revenue increased 7.2% to $269.3 million
• Net profit after tax rose 36.4% to $41.0 million
• ANZ segment revenue up 13.1%, profit up 27.7%
• UK segment losses widen despite sales order growth
• Interim dividend declared at 39 cents per share, fully franked

Strong Half-Year Growth Amid Mixed Regional Performance

Nick Scali Limited has delivered a compelling half-year financial performance for the six months ended 31 December 2025, with revenue climbing 7.2% to $269.3 million and net profit after tax jumping 36.4% to $41.0 million. This marks a significant improvement over the prior corresponding period, underscoring the company’s resilience and operational momentum in a competitive retail furniture market.

The Australia and New Zealand (ANZ) segment was the standout contributor, posting a 13.1% increase in revenue to $251.7 million and a 27.7% rise in net profit after tax to $46.6 million. This growth was supported by positive sales order momentum in late FY25 and the first half of FY26, with written sales orders up 10.5% year-on-year. The ANZ gross margin also improved to 65.9%, reflecting better cost management and a reduction in freight expenses that had weighed on prior results.

UK Operations Continue to Struggle Despite Sales Gains

In contrast, the United Kingdom segment remains a challenge, reporting a net loss after tax of $5.6 million, wider than the $4.1 million loss in the prior year. While written sales orders increased by 12.8% and gross margin surged to 59.2% from 45.1%, revenue fell sharply to $17.6 million due to extended store closures for refurbishments. The company has completed the majority of its UK showroom conversions to the Nick Scali brand, which management hopes will drive a turnaround in profitability going forward.

Operating expenses in the UK were stable excluding currency effects, with savings in employment and property costs offset by increased marketing spend. The application of new accounting standards related to leases also impacted reported losses but had no cash effect.

Capital Investments and Strong Balance Sheet Position

Nick Scali invested $17.1 million in capital expenditures during the half, including land acquisition in South Australia for a new distribution centre and fit-outs for new and refurbished showrooms in both ANZ and the UK. The company’s balance sheet remains robust, with closing cash and equivalents of $91.7 million and net cash of $20 million after accounting for borrowings.

The store network expanded with the opening of a new Plush store in Bendigo, Victoria, and plans for five additional new stores in FY26. Meanwhile, the company closed its Brisbane Skygate store and the Lincoln UK store at lease expiry, reflecting a strategic focus on more profitable locations.

Dividend and Outlook

Reflecting confidence in its financial position, Nick Scali declared a fully franked interim dividend of 39.0 cents per share, up from the prior final dividend of 33.0 cents. The dividend will be paid on 24 March 2026.

Looking ahead, the ANZ segment continues to show positive sales momentum, with January written sales orders up 3.1% year-on-year and like-for-like sales rising 3.2%. The UK segment, while still loss-making, is showing signs of recovery with refurbished stores delivering strong like-for-like sales growth in January.

Overall, Nick Scali appears well-positioned to capitalise on its strong market presence in ANZ while cautiously progressing its UK turnaround strategy.

Bottom Line?

Nick Scali’s solid half-year growth and dividend boost set the stage for a pivotal year as UK recovery efforts continue.

Questions in the middle?

• Will UK store refurbishments translate into sustained profitability?
• How will rising interest rates and inflation impact future margins and costs?
• What is the timeline and expected impact of the new South Australia distribution centre?