Nick Scali’s 1H Profit Jumps 29% Despite UK Store Closures

Strong Growth in ANZ Offsets UK Store Challenges

Nick Scali Limited has delivered a solid financial performance in the first half of FY26, with group revenue climbing 7.2% to $269.3 million and net profit after tax rising 29% on an underlying basis to $46.6 million. The company’s Australian and New Zealand (ANZ) operations were the primary growth engine, posting a 13.1% increase in revenue to $251.7 million alongside a notable improvement in gross profit margin to 65.9%, up 1.5 percentage points from the prior year.

Written sales orders in the ANZ region rose 10.5%, reflecting broad-based demand across all states and New Zealand. The company also reported a 12.7% like-for-like revenue increase, signalling strong consumer appetite and effective sales strategies in its core markets.

UK Segment Navigates Rebranding and Store Refurbishments

In contrast, the UK segment experienced a challenging half, with revenue falling 38.5% to $17.6 million due to extensive store closures for refurbishment and rebranding to the Nick Scali brand. Despite these disruptions, the UK business showed encouraging signs of recovery, with gross profit margin improving significantly to 59.2% from 45.1% in the previous corresponding period.

Written sales orders in the UK increased 12.8%, although year-on-year comparisons are distorted by the store closures. The company has completed refurbishments on 16 stores and reported a strong 32% like-for-like sales growth in January 2026 across rebranded outlets. The UK operation remains in a net loss position of $5.6 million, in line with forecasts, but management is optimistic about the pathway to profitability as new stores open and brand awareness grows.

Healthy Balance Sheet and Strategic Investments

Nick Scali’s balance sheet remains robust, with cash and bank deposits of $91.7 million at the half-year mark and net cash of $20 million. The company declared a fully franked interim dividend of 39 cents per share, reflecting confidence in ongoing cash flow generation.

Capital investments during the period included the acquisition of land in South Australia for a new distribution centre, with construction set to begin in 2026, and the purchase of a retail store in Campbelltown. These moves underscore the company’s commitment to expanding its footprint and enhancing operational efficiency.

Outlook, Expansion and Recovery on Track

Looking ahead, Nick Scali plans to open five additional stores in the second half of FY26, with further opportunities under review. The ANZ market continues to show steady growth, with January sales up 3.1% and like-for-like sales up 3.2%. In the UK, the completion of the refurbishment program is driving improved sales momentum, and negotiations for new store locations are underway.

While the UK segment’s turnaround remains a work in progress, the company’s strategic focus on brand consolidation, operational efficiencies, and product alignment with Australian best sellers positions it well for medium-term profitability gains.