Key Highlights

  • Group Revenue rose 4% to A$516.7 million for FY26.
  • Group net profit after tax rose 22% to A$75.7 million.
  • Group gross Margin rose 210 basis points to 65.1%.
  • The UK Business is moving from loss towards profit, and a final Dividend of 39 cents per share, fully franked, was declared.

Why is the UK business of a furniture retailer that earns most of its profit in Australia attracting so much attention? Because Nick Scali's (ASX:NCK) FY26 result, released on 7 August 2026, showed the UK arm moving from loss towards profit while the domestic business faced softer consumer demand. How quickly the UK can scale, and whether Australian and New Zealand orders hold up, now underpin the Investment case. The period-specific figures provide context for the company’s operating performance and execution priorities.

The business

Nick Scali sells sofas, dining furniture and other lounge and living room products through showrooms in Australia and New Zealand under the Nick Scali and Plush brands, and in the UK through its Fabb Furniture business. It operates a vertically integrated model: it designs, sources from offshore manufacturers and sells through its own stores, which supports high gross margins. Customers typically order and pay a deposit, and the furniture is delivered weeks or months later, so written sales orders are a leading indicator for revenue.

FY26 results

Group revenue: A$516.7 million, up 4%.

Group net profit after tax: A$75.7 million, up 22%.

Group gross margin: 65.1%, up 210 basis points.

Final dividend: 39 cents per share, fully franked. No full-year total.

Australia and New Zealand revenue was A$476.7 million, up 5.1%, with net profit after tax of A$80.5 million, up 10%, and a gross margin of 66%. The UK contributed revenue of about A$40 million, slightly lower because of temporary store refurbishments. The UK gross margin rose from 47.1% to 60.3%, and the business made a A$0.8 million profit in the second half after a first-half loss.

A simple subtraction suggests the UK still made a net loss for the full year: group profit of A$75.7 million is below the A$80.5 million earned in Australia and New Zealand. The point is that profit growth of 22% at group level, ahead of the 10% growth in the core segment, was largely a product of the UK improvement.

Orders and trading

Written sales orders are the key forward indicator. In Australia and New Zealand they rose 2.7% for the year, with a softer second half after encouraging growth in the fourth quarter of FY25. In the UK they rose 31.4%, and like-for-like orders at showrooms open in both periods rose 19% in the second half. In the first five weeks of FY27, Australian and New Zealand orders were steady year on year, while UK orders rose 35%. Management described itself as cautiously optimistic.

These figures need careful reading. UK growth comes from a small base, so a large percentage gain translates to a modest dollar amount, and five weeks is a short sample. The steady order growth in Australia and New Zealand shows resilience in a weak market, but it also shows that domestic growth is limited.

Store rollout

In FY26 the company opened four new stores in Australia and closed two less profitable ones, and closed two UK stores. Two more stores opened in July 2026. For FY27 it plans four additional stores in Australia and New Zealand and further UK expansion as sites are negotiated. Management expects recently opened stores to support Earnings and aims to keep improving margins. New stores typically take time to reach maturity, so earnings effects lag openings, and closing weaker stores can improve returns while reducing total revenue in the short term.

Sector and competitive position

Nick Scali operates in a discretionary category that depends on housing turnover, consumer confidence and interest rates. It competes with Harvey Norman, Freedom, Fantastic Furniture and Amart, as well as online retailers and imported brands, and in the UK with established furniture groups. The vertically integrated model and sourcing capability are strengths, and the 66% gross margin in Australia and New Zealand reflects them. The risk is that discounting by competitors or currency movements, since product is sourced offshore, compress margins.

Risks and what to monitor

Consumer demand: weak housing activity and cost-of-living pressure could reduce orders.

Margins: a more encouraging US dollar or freight costs would lift product costs, and price competition could limit pass-through.

UK execution: scaling a business that only recently reached profitability, with store closures offsetting openings.

Rollout risk: new stores may not reach expected sales or may cannibalise existing ones.

Order conversion: written orders convert to revenue with a lag, so sharp changes in cancellations or delivery timing can shift results between halves.

Upcoming developments

Investors will watch the first-half FY27 result due in early 2027, any trading update at the annual general meeting, and written sales order trends through the key Black Friday and pre-Christmas period. UK like-for-like orders and the margin on UK sales will be the clearest tests of the turnaround.

The takeaway

Nick Scali reported higher profit and margins despite a subdued consumer, helped by progress in the UK. The domestic business looks steady rather than encouraging, so the UK's progress matters more than its size suggests.