Nick Scali Posts 31% Profit Growth and Declares 39 Cent Dividend

Robust Profit Growth Despite UK Revenue Dip

Nick Scali Limited (ASX:NCK) delivered a strong FY26 performance, with net profit after tax soaring 31.2% to $75.7 million on a statutory basis, and underlying NPAT up 22.1% to the same figure. Revenue climbed 4.3% to $516.7 million, supported by disciplined pricing and inventory management that lifted gross margin by 210 basis points to 65.6%.

The Australian and New Zealand (ANZ) segment led the charge, posting a 10% increase in net profit after tax to $80.5 million and revenue growth of 5.1% to $476.7 million. However, the UK business remained in the red with a $4.8 million loss, albeit showing a marked turnaround in the second half with a $0.8 million profit, helped by a 31.4% surge in written sales orders to $45 million and a gross margin leap to 60.3% from 47.1% the prior year.

Showroom Expansion and Capital Investments

The group expanded its footprint with four new stores in ANZ during FY26 and two more in July 2026, including a new Nick Scali store in Ballarat, Victoria, and Plush-Think Sofas outlets in Bendigo, Tuggerah, and Cannington. Two Nick Scali stores in Brisbane Airport and Toowoomba were closed, aligning with a strategic network optimisation. In the UK, 16 stores were refurbished and rebranded, with two concessionary stores closed as part of a long-term network strategy.

Capital expenditure totalled $21.9 million, including the $7.9 million acquisition of the Campbelltown retail store and $3.8 million for land to build a new distribution centre in South Australia. The group also invested $4.2 million and $4.0 million in refurbishing its ANZ and UK showroom networks, respectively. A new warehouse in the UK commenced operations in June 2026.

Strong Cash Position and Dividend Declaration

Nick Scali maintained a robust balance sheet with $106.6 million in cash and bank deposits and net cash of $34.9 million after borrowings. Operating cash flows increased 33.7% to $154.4 million, driven by higher profitability and favourable working capital movements.

The board declared a fully franked final dividend of 39 cents per share, payable on 22 October 2026, continuing its track record of shareholder returns. This matches the interim dividend declared earlier in the year and reflects confidence in the group's ongoing earnings capacity.

Inaugural Climate Disclosures and Governance

For the first time, Nick Scali published a Sustainability Report aligned with the Australian Sustainability Reporting Standards (AASB S2), disclosing Scope 1 and 2 greenhouse gas emissions totaling 7,735 tonnes CO2-e. The report outlines the group's governance framework, risk management processes, and scenario analysis related to climate risks and opportunities, although no formal emissions reduction targets have been set yet.

The board retains oversight of climate matters through the Audit and Risk Committee, integrating climate-related risks into enterprise risk management. Management focuses on energy efficiency improvements and supplier engagement to mitigate transition and physical climate risks.

Outlook and Growth Prospects

Early trading in FY27 shows flat written sales orders in ANZ, cycling off a strong prior year, while the UK segment continues positive momentum with a 35% increase in written sales orders in the first five weeks. The group plans to open four additional stores in ANZ and one in the UK during FY27, aiming to sustain growth and capitalise on the UK market recovery.

Nick Scali's strategic investments in property and showroom refurbishments, combined with disciplined cost management and margin improvement, position the group for continued resilience amid a subdued retail environment.