Half Yearly Report and Accounts

• Nick Scali Limited's revenue increased by 10.8% to $251.068 million compared to the previous corresponding period.
• Statutory profit after tax decreased by 30.2% to $30.036 million.
• Underlying profit after tax decreased by 22.6% to $33.305 million, excluding restructuring costs and freight forwarder issues.
• A fully franked interim dividend of 30.0 cents per ordinary share was declared, payable on March 26, 2025.
• The ANZ Group's underlying net profit after tax was $36.0 million, exceeding the guidance of $30-33 million.
• The UK business incurred an underlying net loss after tax of $2.8 million, better than the guidance of $3.3-3.8 million loss.
• Closing cash and cash equivalents at 31 December 2024 are $87.6m and net cash was $15.9m.

Score: 6

Explanation: The sentiment is neutral to slightly positive. While revenue increased and some segments exceeded expectations, profit declined significantly. The UK acquisition shows promise, but ongoing challenges and delays temper overall optimism.

• Revenue increased by 10.8% to $251.068 million.
• ANZ Group's underlying net profit after tax was $36.0 million, exceeding the guidance of $30-33 million.
• UK business incurred an underlying net loss after tax of $2.8 million, better than the guidance of $3.3-3.8 million loss.
• Online written sales orders for the ANZ Group increased by 17.0% to $18.6 million.
• Post acquisition restructuring in the UK has resulted in a full realised run rate savings of circa $2m per annum, partially reflected in the period.
• Nick Scali UK stores were the top 3 performing UK stores in January 2025 for written sales orders, only 1 of which was top 5 under Fabb.

• Statutory profit after tax decreased by 30.2% to $30.036 million.
• Underlying profit after tax decreased by 22.6% to $33.305 million.
• ANZ Group revenue for the period was $222.5m, -1.8% v 1H FY24.
• UK written sales orders of $19.4m were significantly impacted during the period, particularly on the second quarter FY25, from the disruption to the business caused by stores closed for refurbishment and the Fabb product range being cleared from showrooms and warehouse inventory.
• Gross Margin % decreased -3.3%.

• The UK store refurbishments will cause further disruption to written sales orders.
• The UK business is expected to incur increased operating losses in the second half of FY25 compared to the first half.
• Some stores that were expected to open in the second half have been delayed to FY26.
• A one-off expense of $2.8m was incurred from extensive detention and demurrage fees caused by the appointment of a liquidator to the ANZ Groups main freight forwarder, restricting access to ANZ Group containers landed into Australia for several weeks.

The company expects further disruption and increased operating losses in the UK in the second half of FY25 due to ongoing store refurbishments. Some store openings in ANZ have been delayed to FY26.

• ANZ Group Underlying net profit after tax was $36.0m, above the $30-33m profit guidance provided at the October 2024 Annual General Meeting (the AGM).
• UK Underlying net loss after tax was $2.8m, lower than the $3.3m 3.8m loss guidance provided at the October 2024 AGM.

The furniture retail industry is facing challenges related to supply chain disruptions, increased freight costs, and changing consumer preferences. Nick Scali's results reflect these industry-wide pressures, particularly the impact of freight forwarder failures and the need to adapt to evolving market conditions through acquisitions and store refurbishments.

• Without specific competitor data in this document, a direct comparison is difficult.
• However, the reported gross margin of 62.3% can be benchmarked against other furniture retailers globally.
• Companies like Williams-Sonoma and Ethan Allen typically aim for gross margins in the 40-50% range, suggesting Nick Scali's margin is relatively strong, although down 3.3% from the previous period.
• The online sales growth of 17% is a positive sign, aligning with the broader industry trend of increasing e-commerce penetration.
• The UK acquisition and subsequent restructuring are strategic moves to expand market presence, similar to how other retailers like IKEA have pursued international growth.

• Shareholders will receive a fully franked interim dividend of 30.0 cents per share.
• Employees may be affected by restructuring activities, particularly in the UK.
• Customers in the UK will experience improved store formats and product offerings following refurbishments.
• Suppliers may see changes in demand as the company adjusts its product mix and expands its UK operations.
• Creditors are unlikely to be significantly impacted, as the company maintains a net cash position.

• Continue the programme of store refurbishments and rebranding to Nick Scali in the UK.
• Open one Plush store in Melton, Victoria.
• Review potential new store locations in the UK.
• Remediation of acquired UK creditors with a final $1.6m expected in 2H FY25.

• 30 June 2024: Year end for final dividend of 33.0 cents per share paid on 17 October 2024
• 31 December 2024: End of the half-year reporting period
• 7 February 2025: Directors declared a fully franked interim dividend of 30.0 cents per share
• 5 March 2025: Record date for the interim dividend
• 26 March 2025: Payment date for the interim dividend
• 30th June 2025: The Group aim is to complete the refurbishment and rebranding of a further 8 stores by this date.