Nick Scali profit jumps as trading defies cost-of-living crunch

The boss of furniture retailer Nick Scali says strong employment has helped buoy consumer spending on big ticket items, with the company remaining in a better position than pre-COVID despite the cost-of-living crunch hurting Australian households.

The ASX-listed homewares business reported a jump in first-half profits of 70.2 per cent to $60.6 million, while revenues were up 57.4 per cent to $283.9 million.

Chief executive Anthony Scali told analysts on Monday morning that trading was stronger than expected in January. “We had anticipated a slowdown compared to the COVID-19 boom, yet trading remains better than pre-COVID,” he said. The impact of rising interest rates had not yet dampened consumer confidence in the way that many had expected, he explained.

“One reason is the low unemployment rate and a significant increase in wages and salaries.”

The resilience in demand failed to inspire the market, with Nick Scali shares slumping by more than 6 per cent to $11.66 at 10:45am as investors decided it was time to take profits. The stock had run up significantly in the lead-up to the result, and is still ahead by 17.2 per cent year-to-date.

Nick Scali was the first retailer to report its December half-year results, making it a bellwether for other retailers. The ASX 200 was treading water at 7557.50 by mid-morning.

The company’s 40 cent interim dividend was up by 14.3 per cent on last year, but was slightly below market expectations.

Nick Scali is working to refurbish its Plush store network, which includes more than 40 stores, after buying the business in 2021 in a deal worth $110 million.