Nick Scali sinks despite H1 beat as January trading update spooks investors
NCK’s first half profit and margins beat expectations, but shares have continued to slide, shedding over 20%.
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Mentioned
KEY POINTS
- NCK’s first half FY26 result beat expectations on profit and margins, but the stock still sold off hard as investors reassessed the near-term outlook.
- The key change was a softer January update for Australian and New Zealand stores, raising concerns that the strong first half may have pulled demand forward and momentum is cooling.
- This article explains why the market looked past the better-than-expected headline results and sets out what analysts are watching next.
Nick Scali’s (NCK) first half (1H) FY26 print would ordinarily have been the kind of result investors welcome. Revenue – beat, earnings before interest, tax, depreciation and amortisation (EBITDA) – beat, net profit after tax (NPAT) – beat, dividend +30% on the previous corresponding period (PCP)…
Instead, investors sold down shares in the furniture retailer hard on Friday, and the share price is even lower today. NCK shares are now down over 30% since last week, testing the May lows and unwinding most of the gains built up over the past year.
Nick Scali (NCK) price chart
Key numbers from 1H FY26
Revenue $269.3m +7.2% vs PCP and vs $267.5m ests (1% beat)
EBITDA $96.6m +18% vs PCP and vs $90.2m ests (7% beat)
NPAT $41.0m +29% vs PCP and vs $38.0m ests (8% beat)
Interim dividend 39c fully franked (+30% vs 1H FY25)
Executive Chair and CEO Anthony Scali said “the first half delivered solid sales and profit growth in ANZ”, with improved UK execution as refurbishments and rebranding rolled through.
So why is NCK’s share price so at odds with its 1H results? Let’s investigate, as well as what the major investment banks are saying about the stock and its outlook.
Why have Nick Scali’s shares fallen so hard?
Investors have looked past NCK’s headline 1H beat and zeroed in on January’s trading update. Written sales orders rose 3.1% year on year (3.2% like for like), but that growth was cycling a weak January last year, when orders fell 8.5%. In that context, the modest rebound has done little to reassure investors that underlying momentum is strengthening.
Compounding the concern, foot traffic declined around 7% in January, implying sales growth was driven by improved conversion rather than stronger demand — a dynamic that may prove harder to sustain if consumer conditions soften further.
JP Morgan acknowledged a very strong first half but pointed to softer January momentum as a potential sign of cooling demand in a key seasonal period, while also flagging the risk that deliveries and demand may have been pulled forward. Morgans, CLSA, and Canaccord Genuity drew a similar conclusion.
Source: NCK first half results, 13 February 2026.
One clear positive the brokers noted was that Nick Scali’s UK refurbishment program is starting to show up in momentum metrics, despite the fact the division remains loss-making. The company pointed to improved UK written sales following the program, with January written sales of $6.7 million and the four Nick Scali-branded stores delivering 32% like-for-like sales growth in January.
The debate now is how quickly that improvement can scale, and how much investment is required to sustain it.
Trouble at home
As for the Australian and New Zealand segment performance — which accounted for around 93% of the company’s EBITDA — the spread of views among the big brokers widened rather than converged. JP Morgan leaned cautious on near-term ANZ demand signals, leading it to cut its share price target on NCK from $25.50 to $24.10. The broker did see fit, however, to maintain an overweight stance.
Macquarie said the ANZ update had “raised concerns” that the recent RBA rate hike — and expectations of further increases — could weigh on Nick Scali’s second-half and medium-term earnings outlook. The broker cut its FY27 and FY28 earnings forecasts by 9% and 10%, respectively, and reduced its target price by 26% to $21.60. Again, despite the downgrades, the broker maintained a favourable stance, retaining its Outperform rating.
Where to from here?
The debate now centres on ANZ momentum. January written sales rose just 3.1% on a weak prior period, fuelling concerns that higher rates and a cautious consumer are beginning to bite. While much of FY26 revenue is effectively covered, several brokers see the greater earnings risk skewed to FY27 as softer orders flow through.
Set against that are clear positives. Gross margins remain strong, the UK refurbishment program is delivering encouraging like-for-like growth, and the balance sheet provides flexibility for store rollout and potential upside. Brokers broadly agree Nick Scali remains one of the better operators in the sector.
For now, however, the share price is telling the story. Friday’s 22% slide initially extended into this morning, with the stock down as much as 7.6% before noon. Buyers eventually stepped in, and NCK closed at $18.54, up 0.3% on the day. While only a modest recovery, the late-session rebound suggests that, although confidence remains fragile, some investors are tentatively stepping in to buy the dip.
