By Carrie LaFrenz
Nick Scali chief executive Anthony Scali says the true test of consumers’ willingness to spend on big-ticket items like sofas will come in the months ahead, urging investors to look past a soft trading update for January in which the furniture retailer’s shares fall sharply.
Scali said the booming popularity of the November sales events meant shoppers brought forward their spending, resulting in a softer order book than expected in January.
″We had huge growth in November. It’s just getting bigger and bigger,″ Scali said.
“The January result in Australia is because November is so big.” He added that a 7 per cent drop in foot traffic at its stores in the first month of 2026 was not indicative of how trading would pan out over the rest of the year, stating that March and April will be the “true test” of the consumer.
Nick Scali was one of the few retailers to report sales growth in the first quarter of the 2026 financial year, and upgraded its first-half revenue and earnings guidance in late December.
On Friday, it topped those expectations with half-year net profit surging 36 per cent to $41 million, allowing the company to lift its interim dividend by 30 per cent on the prior year to 39¢ per share.
However, investors were still worried about the outlook, and unimpressed by a modest 3.1 per cent increase in the January order book compared with a year ago. Its shares ended down 22.3 per cent to $18.48.
Revenue in the six-month period rose 7.2 per cent to $269.2 million, while earnings before interest and tax jumped to $68.4 million from $50.7 million a year ago.
The company, which also operates the Plush sofa brand, is one of the nation’s largest homeware and furniture retailers with more than 100 stores in Australia and New Zealand. Its performance is regarded as a good barometer of the prospects for the wider economy.
WAM small-cap fund manager Tobias Yao said the company had delivered a solid result, and put the share price slide down to broader negative sentiment, fuelled in part by growing expectations of more interest rate hikes from the Reserve Bank of Australia after it lifted the cash rate for the first time in two years in early February.
Furniture and homeware retailers are grappling with tough market conditions as cost-of-living pressures keep a lid on consumer spending. Temple & Webster’s shares lost nearly one third of their value on Thursday following a disappointing earnings report from the online-only retailer.
Nick Scali entered the United Kingdom two years ago when it acquired 21 Fabb Furniture stores. It has since closed some shops and converted 16 others to the Nick Scali brand and product, where sales have increased significantly since the revamp. The UK division posted a net loss of $5.6 million. Long-term, Nick Scali hopes to have 60 to 70 UK stores.
The retailer will add six stores this year to its network in Australia and New Zealand and Scali said several new UK store opportunities are under negotiation.
He added the UK business was nearly break-even, but it must add more stores to achieve economies of scale and lift profitability.
Revenue at Nick Scali’s Australia and New Zealand stores rose 13.1 per cent, beating the company’s expectations.
Jefferies analysts said in a note that the outlook in the UK was positive, but the local forecast was a concern.
“We have confidence in management’s capability to deliver, but questions outstanding on the weaker macro [economic environment].”
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