The Nick Scali Limited (ASX: NCK) share price has soared 13% in response to the company’s FY25 first-half result.
Nick Scali has four different furniture businesses – Nick Scali, Mocka, Plush and Fabb Furniture (in the UK).
FY25 first-half result
Here are the main highlights from the result for the six months to 31 December 2024:
- ANZ revenue down 1.8% to $222.5 million
- UK revenue of $28.6 million
- Group revenue up 10.8% to $251.1 million
- Underlying EBITDA down 8.8% to $81.8 million
- Underlying ANZ net profit down 16.3% to $36 million
- Statutory net profit down 30.2% to $30 million
- Interim dividend per share down 14.3% to $0.30
ANZ performance
The company said its ANZ written sales orders for the period fell 2.2% year on year to $208.1 million. However, excluding the effect of one less weekend of trading in July 2024 (which is within FY25), June to December written sales orders grew 1.3%.
Excitingly, ANZ group online written sales orders jumped 17% year on year to $18.6 million.
However, the ANZ business saw its gross profit margin decline 1.2% lower to 64.4% because of higher freight rates. The HY25 ANZ underlying operating expenses increased $5.1 million year on year, with the majority being attributable to higher employment expenses.
During the half, a new Nick Scali store in Artarmon, NSW was opened. Two Plush stores in Newcastle and Prospect, NSW, were relocated to a larger format store with the new Plush look.
UK highlights
Nick Scali reported its UK (Fabb Furniture) underlying net loss after tax was $2.8 million, better than the guidance of between $3.3 million to $3.8 million.
UK written sales orders were $19.4 million, which were significantly impacted from the disruption to the business caused by stores closed for refurbishment and the Fabb product range being cleared from showrooms and warehouse inventory.
The UK gross profit margin was 45.1% compared to 41% before the acquisition.
The UK underlying operating expenses were $10.2 million. Its restruturing has resulted into a realised annualised savings of $2 million per year, which was partially reflected in this period.
Four stores were refurbished and re-branded as Nick Scali. The expected gross profit margin on the Nick Scali product when delivered is between 57% to 59%, compared to the Fabb gross profit margin of 41% at acquisition.
A number of potential new stores are currently being reviewed in the UK.
Outlook for the Nick Scali share price
The business said ANZ trading is volatile, with written sales orders down 8.5% in January, while the last week of the January Sale in the first week of February saw 5% growth, compared to 4.2% growth in December.
In the second half, one Plush store will open in Melton, Victoria. Further store openings will be delayed to FY26.
In the UK, eight more stores are to be refurbished and rebranded in the second half.
I think Nick Scali is a great business, but I view the retailer as a cyclical company, so it’s worthwhile being selective about when to invest. I don’t think this is the right time to invest – there are other ASX dividend share’s I’d rather buy today.
