Key Highlights

• Nick Scali reported its FY26 results on 7 August 2026, covering the year to 30 June 2026.

• Group Revenue rose 4% to $516.7 million, while net profit after tax rose 22% to $75.7 million.

• Group gross Margin widened by 210 basis points to 65.1%.

• A final fully Franked Dividend of 39 cents per share was declared, payable on 22 October 2026.

How is Nick Scali (ASX:NCK) coping with a cyber incident and a sharp drop in Australian orders just weeks after reporting a encouraging full-year profit? The short answer is that the furniture retailer's August results looked healthy, but its 21 October trading update showed Demand in its core market weakening, while the smaller UK Business continued to improve.

A encouraging year followed by a sharp slowdown

Nick Scali reported its FY26 results on 7 August 2026, covering the year to 30 June 2026. Group revenue rose 4% to $516.7 million, while net profit after tax rose 22% to $75.7 million. Group gross margin widened by 210 basis points to 65.1%. A final fully franked dividend of 39 cents per share was declared, payable on 22 October 2026.

Roughly seven weeks later the tone changed. On 21 October the company said written sales orders in Australia and New Zealand (ANZ) fell 15% in the first quarter of FY27, against 11% growth in the same quarter a year earlier. Store traffic was around 10% lower. These are company-reported figures, and orders are an early indicator of revenue rather than revenue itself, because furniture is typically delivered weeks or months after purchase.

What the company does

Nick Scali designs and sells sofas, dining furniture and other home furnishings, largely under its own brands, through company-operated showrooms. Its Plush Sofas Brand adds a second format in Australia. In the UK it operates through the business acquired in 2024, Fabb Furniture, which the company has been integrating.

The model is vertically integrated: products are sourced from offshore manufacturers and sold directly to customers, with no wholesaler between. That structure underpins the unusually high gross margin, but it also means Earnings depend heavily on showroom traffic and on the cost of sourcing, freight and currency.

FY26 in more detail

The ANZ division delivered most of the profit. ANZ revenue rose 5.1% to $476.7 million and net profit after tax was $80.5 million, up 10% on FY25 underlying earnings. ANZ gross margin was about 66.0%. Written sales orders rose 2.7% for the year, and the company noted higher employment and Marketing costs.

The UK recovered from a weaker base. UK revenue was about $40.0 million, $1.8 million lower than FY25, but gross margin rose from 47.1% to 60.3%. The division made a net loss of $4.8 million for the year, comprising a $5.6 million first-half loss and a $0.8 million second-half profit. UK written sales orders rose 31.4% to $45.0 million.

During the year, the company opened a Nick Scali showroom in Ballarat and three Plush stores in Bendigo, Tuggerah and Cannington. It also closed two Australian stores and two UK concession sites.

The cyber incident and the trading update

On 13 August the company disclosed that it was investigating a security incident and had taken some systems offline. It said sales orders and deliveries were continuing, and that it had no evidence of unauthorised access to customer data at that time. It notified the Australian Cyber Security Centre and the Australian Federal Police.

The October update said the ERP systems were unavailable for about three weeks, with stores trading and processing orders manually. Management also pointed to a difficult consumer environment. Separating the effect of the incident from broader demand is hard from the outside, and the company has not quantified the split.

Guidance followed. ANZ revenue for the first half of FY27 is expected to be 11% to 14% below the prior corresponding period. Underlying group net profit after tax for the six months to 31 December 2026 is expected to be between $28 million and $32 million. That excludes about $980,000 of consultant and legal costs tied to the incident, which will be reported as non-underlying items.

By contrast, UK written sales orders rose 29% in the quarter, with like-for-like orders up 14%. The company said the gap between those figures partly reflects stores closed for refurbishment a year earlier.

Sector conditions and competitive position

Furniture is a discretionary purchase tied to housing activity, household confidence and cost-of-living pressure. Management's comments on a troubled consumer environment suggest that Nick Scali is not immune to those forces, and that customers are deferring big-ticket purchases. Competitors in Australian home furnishings include other specialist chains and large general retailers.

Its advantages are Brand Recognition in sofas, a direct sourcing model and a high gross margin that gives it room to absorb some Volume softness. Those margins are only as durable as supplier costs, freight rates and the Australian dollar allow, and the company lists protecting gross margin as a priority.

Risks and what to watch

Several uncertainties stand out:

• Whether ANZ order growth recovers once systems are fully normal, or whether weaker traffic reflects a lasting shift in demand.

• The cost Leverage of a store network that continues to expand. Two more ANZ stores are expected in late December 2026, and the FY26 outlook referred to four new ANZ stores in FY27 overall.

• The durability of the UK turnaround, which is still loss-making over the full year, though it improved in the second half.

• The possibility that investigation of the cyber incident reveals further costs or data issues, given the company's statement reflects its position at the time.

• Foreign exchange and freight movements affecting sourcing costs.

The company says it maintains a encouraging balance sheet.

Upcoming developments

The next major milestone is the half-year result for the six months to 31 December 2026, which should show how the weaker ANZ orders translated into revenue and whether profit lands within the guided range. The opening of the new ANZ and UK stores in late December will also be worth monitoring, along with any further update on the security incident.

For readers following the company, the central question is whether the Q1 order decline was largely a temporary disruption or an early sign of a harder trading period.