Highlights

• Nick Scali reported FY26 revenue of AUD 516.7mn and NPAT of AUD 75.7mn.

• Statutory NPAT increased about 31%, while growth against the FY25 underlying NPAT base was about 22%.

• Group gross margin expanded to about 65.6%, while operating cash flow increased to AUD 117.9mn.

• ANZ written orders were flat in the first five weeks of FY27, while UK orders rose about 35% from a closure-affected base.

Nick Scali (ASX:NCK) has closed FY26 with a result that looks powerful in the rear-view mirror but more cautious in the order book. The furniture retailer reported NPAT of AUD 75.7mn, with statutory growth of about 31% and underlying growth of roughly 22%, depending on the FY25 comparison used. Margins expanded, cash generation improved and the UK business moved closer to a turnaround. Yet written orders in Australia and New Zealand were flat in the first five weeks of FY27, placing the domestic outlook at the centre of the next phase.

One Profit Figure, Two Growth Rates

Nick Scali reported group revenue of AUD 516.7mn for FY26, up 4.3%, and NPAT of AUD 75.7mn. The difference between the 31% statutory profit increase and the roughly 22% underlying increase comes from the FY25 comparison base.

FY25 statutory NPAT was AUD 57.7mn after one-off costs associated with the UK acquisition and restructuring. Underlying FY25 NPAT was higher at AUD 62.0mn. Comparing FY26's AUD 75.7mn with the lower statutory base produces growth of about 31%, while comparison with underlying FY25 profit gives growth closer to 22%. Both describe the same FY26 earnings outcome, but the underlying measure provides the cleaner year-on-year comparison.

Margins and Cash Flow Strengthen

Group gross margin increased by about 210 basis points to roughly 65.6%, from 63.5% in FY25. The Australia and New Zealand division generated revenue of AUD 476.7mn, up 5.1%, and divisional net profit of AUD 80.5mn, around 10% higher on an underlying basis, with gross margin near 66%.

Operating cash flow rose to AUD 117.9mn from AUD 89.6mn, while year-end cash was approximately AUD 106.6mn. Directors declared a fully franked final dividend of 39 cents per share, taking the full-year payout to 78 cents from 63 cents in FY25. Payment is scheduled for 22 October.

UK Business Shows Turnaround Progress

The UK operation, built around the acquired Fabb Furniture network and now being rebranded, narrowed its FY26 net loss to AUD 4.8mn and recorded a small profit of about AUD 0.8mn in the second half.

UK gross margin rose to 60.3% from 47.1% as Nick Scali's higher-margin direct-sourcing model was introduced. Written sales orders increased 31.4% for the year and about 19% on a like-for-like basis in the second half. The improvement supports the turnaround case, although the business remains at an early stage.

Why Written Orders Matter More for FY27

Furniture revenue reflects products ordered earlier and recognised when delivered, making written sales orders a more immediate signal of future trading activity.

Across FY26, group written orders rose 2.7%. In the first five weeks of FY27, ANZ written orders were flat. UK written orders were up about 35%, but the company noted that the comparison was affected by earlier store closures and should not be extrapolated without caution.

Nick Scali shares rose 3.37% to AUD 17.81 on results day in the source material, remaining below the 52-week high of AUD 26.08. The measured reaction reflects the balance between stronger FY26 earnings and a less certain domestic demand outlook.

FY27 Opens With Opportunity and Risk

Nick Scali enters FY27 with higher gross margin, a UK business closer to break-even, four additional ANZ stores planned and a larger full-year dividend.

The counterweight is domestic discretionary demand. If flat ANZ written orders persist, revenue growth could slow. The UK turnaround also carries execution risk if consumer spending weakens or new-store expansion does not translate into sustained profitability.

What to Watch

ANZ written orders are the clearest near-term indicator. A return to growth would strengthen the domestic outlook, while sustained weakness would place pressure on FY27 revenue expectations. The market will also watch whether the UK division maintains its second-half profit as new stores open.

Gross margin is another key measure. If softer demand requires heavier discounting, the FY26 margin improvement could come under pressure.

Risks

Nick Scali is exposed to consumer discretionary spending, particularly large furniture purchases. Prolonged weakness in ANZ orders could slow revenue growth. The UK turnaround remains subject to consumer conditions and store execution, while heavier discounting could pressure margins.