The Nick Scali Limited (ASX: NCK) share price has jumped 10% after the retailer announced a FY26 trading update.
Nick Scali sells furniture through three businesses – Nick Scali ANZ, Plush and Nick Scali UK (previously Fabb Furniture).
FY26 trading update
The company announced that trading across Australia and New Zealand for the first quarter of FY26 saw 11.6% year on year growth of total written sales orders, with same-store written sales orders up 10.7%.
The actual sales revenue in the first quarter increased by 6% and it expects sales revenue for the first half of FY25 to be up between 7% to 9%.
In FY26, the company is committed to opening five new stores, with three of those being Nick Scali stores and two being Plush stores.
Turning to the UK, Nick Scali revealed that as more store refurbishments are completed, written sales orders have begun to improve.
Nick Scali-branded stores in August and September saw growth of 10% compared to when they traded as Fabb stores in the prior corresponding period. During September, there were 14 stores trading as Nick Scali.
The UK gross profit margin in the first quarter was 58.3%, compared to 41% at the time of the acquisition and 47.1% in FY25.
Nick Scali said it can see a clear improvement in written sales will “transcend to better revenue results towards the end of the half”.
Profit expectations
The business is expecting a statutory loss in the UK of between A$5 million to A$6 million in the first half. ANZ statutory net profit in the first half is expected to be between $39 million to $40 million, up from $34 million in the prior period.
Therefore, the company is expecting HY26 net profit to rise between 10% to 16.7%.
Final thoughts on the Nick Scali share price
The company is clearly recovering from the worst of the hit to sales from the inflation headwinds.
This seems like the type of business that’s exposed to cyclical/discretionary forces, so this doesn’t seem like the right time to invest. I’d wait until there are worries about retail sales again.
There are other ASX dividend shares I’d rather buy first.
