NCK
Nick Scali Limited
ASX
Half Year FY25 Results Announcement
Sentiment:
Results Announcement
6 February 2025 4:18 PM
Nick Scali Limited reports a mixed H1 FY25 with decreased profits in ANZ but overall group revenue increase due to UK acquisition, while also facing freight forwarding issues and store refurbishment disruptions.
Delay expected
Further stores expected to open 2H FY25 will be delayed to FY26.
Summary
- Nick Scali Limited's ANZ Group revenue decreased by 1.8% to $222.5 million in H1 FY25 compared to $226.6 million in H1 FY24.
- The ANZ Group's underlying net profit after tax (NPAT) was $36.0 million, exceeding the guidance of $30-33 million provided at the October 2024 AGM.
- The statutory ANZ Group net profit after tax was $34.1 million.
- A one-off expense of $2.8 million was incurred due to freight forwarding issues.
- ANZ Group written sales orders decreased by 2.2% to $208.1 million compared to 1H FY24, but grew 1.3% from June to December.
- ANZ Group online written orders increased by 17.0% to $18.6 million.
- The gross margin for the ANZ Group was 64.4%, a decrease of 1.2% due to higher freight rates.
- The UK revenue was $28.6 million, with a gross margin of 45.1%.
- The underlying net loss after tax for the UK was $2.8 million, better than the guidance of $3.3-3.8 million.
- The statutory UK net loss after tax was $4.1 million, better than the guidance of $5.1-5.9 million.
- Group revenue increased by 10.8% to $251.1 million.
- Group net profit after tax (NPAT) decreased by 22.8% to $33.2 million.
- Underlying EBITDA decreased by 8.8% to $81.8 million.
- The interim dividend per share was 30 cents, a decrease of 14.3%.
Sentiment
Score: 6
Explanation: The sentiment is neutral to slightly positive. While revenue increased due to the UK acquisition, profits are down and there are ongoing challenges with freight and store refurbishments. The exceeding of guidance is a positive sign.
Positives
- ANZ Group underlying NPAT exceeded guidance.
- Group revenue increased due to the UK acquisition.
- UK net loss was lower than expected.
- Online sales in ANZ increased significantly.
- Cost savings are being realised in the UK following restructuring.
- Rebranded UK stores are performing well.
Negatives
- ANZ Group revenue decreased by 1.8%.
- ANZ Group gross margin decreased due to higher freight rates.
- Group net profit after tax decreased by 22.8%.
- Interim dividend per share decreased by 14.3%.
- A one-off expense of $2.8 million was incurred due to freight forwarding issues.
- Trading continues to be volatile with written sales orders down in the month of January 8.5%.
Risks
- Volatile trading conditions are expected to continue.
- Further store refurbishments in the UK are expected to cause disruption and increase operating losses.
- Delays in store openings are anticipated.
- Higher freight rates are impacting gross margins.
- The business failure of a freight forwarder caused significant one-off expenses.
Future Outlook
Trading is expected to remain volatile. Further store refurbishments in the UK are expected to cause disruption and increase operating losses in the second half. Some store openings will be delayed to FY26.
Management Comments
- 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.
Industry Context
The furniture retail industry is currently facing challenges such as supply chain disruptions (as evidenced by the freight forwarding issues) and fluctuating consumer demand. Nick Scali's expansion into the UK market is a strategic move to diversify its revenue streams, but it also introduces new operational complexities.
Comparison to Industry Standards
- Comparable companies in the furniture retail sector, such as Harvey Norman and Temple & Webster, have also reported fluctuating results due to similar market conditions.
- Nick Scali's gross margin in ANZ (64.4%) is generally competitive within the industry, but the decrease indicates pressure from rising costs.
- The UK expansion mirrors strategies employed by other Australian retailers seeking growth in international markets, but success depends on effective integration and brand adaptation.
Stakeholder Impact
- Shareholders will receive a lower interim dividend.
- Employees may experience uncertainty due to store refurbishments and potential relocations.
- Customers in the UK will have access to the Nick Scali product range.
- Suppliers may be affected by changes in product sourcing and demand.
- Creditors in the UK have been partially remediated.
Next Steps
- Continue store refurbishments and rebranding in the UK.
- Launch Nick Scali product range in remaining Fabb stores.
- Monitor trading conditions and adjust strategies accordingly.
- Address supply chain issues to mitigate freight costs.
- Open one Plush store in Melton, Victoria.
Key Dates
- May 2024: Reference to an event in May 2024.
- October 2024: Annual General Meeting (AGM) where profit guidance was provided and shareholder approval for equity raise was obtained.
- 31 December 2024: End of the half-year period (H1 FY25).
- January 2025: UK online store launched and marketing commenced; re-branded UK stores performed well.
- 7 February 2025: Date of the results announcement and teleconference presentation.
- 5 March 2025: Record date for the interim dividend.
- 26 March 2025: Payment date for the interim dividend.
- 30 June 2025: Target date to complete the refurbishment and re-branding of a further 8 stores in the UK.
Keywords
Nick Scali, Financial Results, H1 FY25, Dividends, UK Acquisition, Retail, Furniture
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.