Nick Scali suffers half-year profit slump as UK business Fabb struggles

Shares in furniture retailer Nick Scali have surged to record highs despite it posting a slump in first-half profit, weighed by the poor performance of its newly acquired British chain Fabb.

Nick Scali revealed on Friday group net profit slid 30.2 per cent to $30 million in the six months to the end of December, owing to losses in the UK home furniture retailer.

Fabb — included in Nick Scali’s reporting for the first time — posted an underlying net loss of $2.8m, lower than the $3.3m to $3.8m loss forecast.

The company said the lacklustre performance at Fabb’s 21 stores, acquired early last year, was caused by store closures as it refurbishes and rebrands as Nick Scali.

Investors were unconcerned by the news, sending Nick Scali shares closing at a record high of $18.

“Re-branded Nick Scali UK stores were the top-three performing UK stores in January 2025 for written sales orders, only one of which was in the top five under Fabb,” Nick Scali managing director Anthony Scali said.

“Our aim is to complete the refurbishment and re-branding of a further eight stores by 30th June 2025.

“The top-selling Nick Scali sofa in ANZ is now the top selling sofa in our UK stores. This supports our belief that the Nick Scali product range will appeal to UK customers.”

It declared an interim dividend of 30¢ a share, fully franked. That’s down from 35¢.

The Australian and New Zealand arm — which recently experienced disruptions caused by the collapse of one of its freight forwarders that led to delivery headaches — reported a 1.8 per cent decline in revenue to $222.5m, with statutory net profit down 20.7 per cent to $34.1m.

Underlying net profit for the Australian and New Zealand division hit $36m, above guidance of between $30m and $33m.

Last November, Nick Scali flagged it was expecting to incur unexpected additional storage costs for hundreds of containers full of furniture due to delays caused by the failure of freight line Lion Global Forwarding.

Friday’s results show it incurred a one-off expense of $2.8m from extensive detention and demurrage fees caused by Lion’s collapse, restricting access to its containers landed into Australia for several weeks.

Nick Scali warned trading continued to be volatile with written sales orders down 8.5 per cent in January and 5 per cent in the first week of February. This was compared with sales growth of 4.2 per cent in December.