NCK
Nick Scali Limited
ASX
1H FY25 Investor Presentation
Sentiment:
Results Presentation
6 February 2025 4:18 PM
Nick Scali Limited reports its 1H FY25 results, highlighting revenue and profit figures for both its ANZ and UK operations, along with updates on its UK acquisition strategy and store network.
Better than expected
ANZ Group's underlying profit after tax of $36.0 million surpassed the October 2024 AGM guidance of $30-33 million.
Delay expected
Some stores that were expected to open 2H FY25 have been delayed to FY26.
Summary
- Nick Scali Limited presented its 1H FY25 results on February 7, 2025.
- The ANZ Group reported revenue of $222.5 million and a gross profit margin of 64.4%.
- ANZ's underlying profit after tax was $36.0 million, exceeding the AGM guidance of $30-33 million.
- The statutory profit after tax for ANZ was $34.1 million.
- The UK operations reported revenue of $28.6 million and a gross profit margin of 45.1%.
- The underlying loss after tax for the UK was $2.8 million, with a statutory loss after tax of $4.1 million.
- The application of AASB16 increased the UK loss after tax by $1.2 million.
- Group cash and bank deposits stood at $87.6 million as of December 31, 2024.
- An interim dividend of 30 cents per share, fully franked, was announced.
- ANZ Group written sales orders for 1H FY25 were $208.1 million, a decrease of 2.2% compared to 1H FY24, but June to December orders increased by 1.3%.
- Group written sales orders for 1H FY25 totaled $227.4 million, an increase of 7.0% compared to 1H FY24.
- The company is targeting to complete 8 further re-branded Nick Scali Stores by 30th June 2025.
- Some stores that were expected to open 2H FY25 have been delayed to FY26.
Sentiment
Score: 6
Explanation: The sentiment is moderately positive due to strong ANZ performance and growth in written sales orders, but tempered by losses in the UK and some delays in store openings.
Positives
- ANZ Group's underlying profit after tax exceeded expectations.
- Group written sales orders showed a 7.0% increase.
- The UK gross margin has improved post-acquisition.
- Re-branded Nick Scali stores in the UK are performing well.
- ANZ Group online written sales orders are up 17.0%.
- Cost savings of approximately $2 million per annum have been realized in the UK following restructuring.
Negatives
- ANZ Group revenue decreased by 1.8% compared to 1H FY24.
- ANZ Group gross margin decreased by 1.6% due to higher freight rates.
- The UK operations reported an underlying loss after tax of $2.8 million.
- NZ trading conditions remain more challenged than Australia.
- Some stores that were expected to open 2H FY25 have been delayed to FY26.
- The company expects further disruption and increased short term losses 2H FY25 in the UK compared to 1H FY24.
Risks
- Trading conditions in ANZ remain volatile.
- The UK operations are currently loss-making.
- Store refurbishments in the UK may cause short-term losses.
- Delays in new store openings could impact future growth.
- Higher freight rates are impacting ANZ Group's gross margin.
- The business failure of a freight forwarder resulted in $2.8m ($1.9m post tax) costs costs in ANZ.
Future Outlook
The company anticipates continued volatility in ANZ trading conditions and expects further disruption and short-term losses in the UK during 2H FY25 due to store refurbishments; some store openings have been delayed to FY26.
Industry Context
The announcement reflects the challenges and opportunities in the furniture retail sector, including managing supply chains, integrating acquisitions, and adapting to changing consumer preferences, with Nick Scali focusing on leveraging its brand and optimizing its store network.
Comparison to Industry Standards
- Without specific competitor data, it's difficult to provide a precise comparison.
- However, a gross margin of 64.4% in ANZ is generally strong for furniture retailers, suggesting efficient sourcing and pricing strategies.
- The UK acquisition is still in its early stages, and the focus is on improving profitability through rebranding and product range changes.
- Comparable companies like Harvey Norman or JB Hi-Fi in Australia typically aim for similar gross margins, but this varies based on product mix and market conditions.
- Globally, furniture retailers like IKEA or Williams-Sonoma also focus on optimizing gross margins and expanding their online presence.
Stakeholder Impact
- Shareholders will benefit from the interim dividend and potential future growth.
- Employees may experience changes due to store refurbishments and restructuring.
- Customers will see a wider range of Nick Scali products in the UK.
- Suppliers will be integrated into Nick Scali's procurement processes.
- Creditors are being remediated as part of the UK acquisition.
Next Steps
- Continue refurbishing and rebranding stores in the UK.
- Evaluate locations for new stores in the UK.
- Open a new Plush store in Melton, Victoria.
- Transition to ANZ customer delivery model in the UK.
Key Dates
- May 2024: UK Fabb Business acquired
- October 2024: Shareholder approval at the AGM for equity raise for the UK acquisition
- December 2024: Nick Scali re-branded stores completed Boxing Day
- December 31, 2024: Cash and bank deposits at $87.6m
- January 2025: Radio and TV marketing commenced in the UK
- January 2025: Re-branded Nick Scali stores were the top 3 performing stores
- February 7, 2025: 1H FY25 Results Presentation
- June 30, 2025: Target is to complete 8 further re-branded Nick Scali Stores
Keywords
Nick Scali, financial results, FY25, ANZ, UK, revenue, profit, sales orders, gross margin, acquisition, stores, dividend
NCK
Nick Scali Limited
ASX
Sector: Consumer Discretionary Distribution & Retail
Filings with Classifications
Better than expected
6 February 2025 4:18 PM
Results Presentation
- ANZ Group's underlying profit after tax of $36.0 million surpassed the October 2024 AGM guidance of $30-33 million.
Delay expected
6 February 2025 4:18 PM
Results Announcement
- Further stores expected to open 2H FY25 will be delayed to FY26.
Delay expected
6 February 2025 4:18 PM
Half-Year Report
- Some stores that were expected to open in the second half have been delayed to FY26.
Delay expected
6 February 2025 4:18 PM
Results Presentation
- Some stores that were expected to open 2H FY25 have been delayed to FY26.
Worse than expected
19 November 2024 4:12 PM
Operational Update
- The delays and unexpected costs associated with the freight forwarder's liquidation put Nick Scali's ability to meet its previously stated NPAT guidance at risk.
Delay expected
19 November 2024 4:12 PM
Operational Update
- Significant delays in the delivery of Nick Scali's products are occurring due to the liquidation of one of its freight forwarders and customs agents, resulting in containers being held at ports.
Capital raise
21 October 2024 12:37 AM
Annual General Meeting Results
- A capital raising through a share issue to Scali Consolidated Pty Limited was approved with 99.66% of votes in favor.
Worse than expected
20 October 2024 5:20 PM
Annual Report
- While the Australian and New Zealand business performed well, the UK acquisition is expected to result in losses during the first half of FY25, indicating worse than expected results in that segment.
Worse than expected
18 September 2024 7:07 PM
Annual Report
- The 7.8% decrease in revenue compared to the previous year indicates worse than expected results, despite the company's efforts to improve gross margins and expand into new markets.
Capital raise
18 September 2024 7:07 PM
Annual Report
- The company undertook an equity raise to fund the UK acquisition, raising $54.8 million (net of costs).
- A further $4 million equity raise is proposed, subject to shareholder approval at the October 2024 AGM.
Capital raise
18 September 2024 7:03 PM
Notice of Annual General Meeting
- The company is proposing to issue 299,999 shares to Scali Consolidated Pty Limited at $13.25 per share, raising AUD 4 million.
- The funds will be used to support the company's UK growth strategy.
Capital raise
25 April 2024 6:52 PM
Capital Raising Announcement
- Nick Scali has completed a A$46 million institutional placement.
- A A$4.0 million conditional placement to Anthony Scali is planned, subject to shareholder approval.
- A Share Purchase Plan (SPP) is being offered to eligible shareholders.
Capital raise
23 April 2024 7:16 PM
Investor Presentation
- A$46.0 million will be raised through a fully underwritten institutional placement.
- A$4.0 million will be raised through a conditional placement to Anthony Scali, subject to shareholder approval.
- Eligible shareholders will be offered a non-underwritten SPP to raise up to A$10.0 million.
Capital raise
23 April 2024 7:16 PM
Acquisition Announcement
- Nick Scali will raise A$46.0 million through an underwritten institutional placement.
- Eligible existing shareholders will be offered the ability to participate in a non-underwritten SPP to raise up to A$10.0 million.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.