Nick Scali insists there is ‘pathway to profitability’ for British stores as it posts profit slump

Nick Scali shares have surged to record highs after its boss insisted there was “a pathway to profitability” for the furniture chain despite being weighed down by its British stores.

Kicking off reporting season for the retail sector on Friday, Nick Scali revealed a 5.8 per cent lift in revenue to $495.3 million for the 2025 financial year, as profit slumped 28.3 per cent to $57.7m, a result attributed to its loss-making British stores.

The company acquired British furniture chain Fabb early last year and is in the process of rebranding the 21 stores in its network under the Nick Scali brand.

While it already warned sales at the British stores would be impacted amidst the refurbishments, the group revealed the extent of the losses had widened to $11.2m, from a loss of $1.4m a year ago.

It took a $33.9m hit to UK written sales orders “caused by stores closed for refurbishment for long periods and the continuous clearance of old Fabb product range being sold from showrooms and warehouse inventory”.

But Nick Scali chief executive Anthony Scali said there was a “pathway to profitability” for the British stores and there was “contingent belief that the product is right for the UK”.

So far, 12 stores have been refurbished and rebranded, with the remaining expected to be completed during the first half of the 2026 financial year.

Mr Scali said the rebranded stores have already delivered a 58 per cent gross profit margin for May and June, compared with 42 per cent at acquisition.

Mr Scali said based on recent average sales per Nick Scali store in Britain, each store would need to lift sales by $10,000 a week, or an additional 2.5 orders per week, to begin contributing profits to the group.

Despite the near-30 per cent profit slump, investors chose to focus on Nick Scali’s potential for growth, sending shares 6.9 per cent higher to $20.49 when the market closed on Friday.

“I’m confident with the right sales team, we’re going to get the uplift in sales,” Mr Scali told investors on a call.

In Australia and New Zealand — which accounts for the majority of Nick Scali’s sales with over 60 stores — sales fell 1.4 per cent to $453.5m for 2025, while net profit slumped 12.3 per cent.

Nick Scali said sales in Australia and New Zealand grew by 7.7 per cent in July.

It expects sales revenue for the first quarter of the 2026 financial year to be up on the prior year.

MLC Asset Management senior portfolio manager Anthony Golowenko said Nick Scali appeared to have a good growth trajectory and the company was making steady progress in building its business in the UK.

“This is setting the scene for a solid (2026 financial year), more favourable customer demographics, and likely rate cuts adding to consumer confidence,” he said.

Nick Scali declared a final dividend of 33¢ a share.