Nick Scali's Best Results in Years Meet a 40% Share Price Fall
Fund managers say a strong earnings result was overshadowed by trading update softness and a broader discretionary retail rotation
17 Jul 2026 · 4 min read
In short
Nick Scali's Australian net profit rose 37% year on year in its strongest half-year result in years, per Auscap Asset Management.
Shares fell 40-50% by March 2026 despite the strong result, as a weaker trading update overshadowed the earnings beat.
Wilson Asset Management sees Nick Scali as well placed to benefit once domestic interest rates begin cutting.
Furniture retailer Nick Scali delivered some of its strongest results in years through late 2025, only to fall 40 to 50 per cent by March 2026 despite continued profit growth, leaving fund managers debating whether the sell-off reflects a genuine slowdown or simple sector rotation.
Strong results across both Australia and a maturing UK business
Perpetual Asset Management's August 2025 update reported shares up 26.3 per cent following results showing exceptional quality in the Australian and New Zealand business, with accelerating order growth and gross margins exceeding expectations. Antares Capital's own August update highlighted the real upside surprise: material improvement in gross margin at the UK business, a segment central to its investment thesis, following Nick Scali's expansion there through the acquisition and rebranding of Fabb Furniture stores.
Nick Scali reported exceptionally strong same-store sales across its Australian network in 2H25 (+21%), with a trading update confirming sales momentum is continuing into FY26 (written sales orders +9% in July on pcp). The Company's expansion into the UK is starting to bear fruit, with the Company delivering a material increase in gross margin.
— Airlie Funds Management, Monthly Report, September 2025
Upgraded guidance confirms the momentum
Infinity Asset Management's October 2025 update reported shares up 10.4 per cent following a robust first-quarter trading update, with guidance for first-half statutory net profit of $33 million to $35 million, up from $30 million the prior year, and ANZ business earnings guided to $39 million to $40 million versus $34 million. Hyperion Asset Management's December 2025 update showed a further upgrade: ANZ revenue growth guidance lifted from 7 to 9 per cent to 10 to 12 per cent, driving higher expected statutory net profit for the first half.
A sector-wide rotation triggers a pullback
Antares Capital sold its position in October 2025, banking profits given increasing UK economic headwinds and a growing probability the Reserve Bank would not cut rates again in Australia. Perpetual Asset Management's November update reported a 6.1 per cent decline that month despite no company-specific news, attributing the pullback to a broader sector-wide rotation out of discretionary retail as rate cut expectations were pushed to mid-2026.
A strong result meets a weak trading update
The sharper reversal came in March 2026. Perpetual Asset Management reported shares down 33.5 per cent for the quarter, falling sharply on result day despite gross margins, EBITDA and first-half profit all improving materially year on year, because those positives were overshadowed by a weaker-than-expected trading update showing softer like-for-like weekly sales. Auscap Asset Management's March update highlighted the disconnect starkly: Australian net profit was up 37 per cent year on year for the half, with continued gross margin expansion, in what Auscap called probably one of the company's strongest reporting seasons yet, even as the stock fell to trade at lower multiples than before its global rollout began.
He picks out Nick Scali as one that has dropped 40-50%, despite having some of the best return on equity metrics on the ASX. A broadly positive February result and a successful expansion to the UK should have been catalysts for Nick Scali. Instead it finds itself trading at lower multiples, around where it was before the global rollout.
— Auscap Asset Management, Article, March 2026
A quality name for the next rate-cutting cycle
Centennial Asset Management's May 2026 view reframed the stock as one worth rotating into once the RBA moves to a rate-cutting stance, given around 65 per cent of GDP is tied to consumer and household spending. Wilson Asset Management's June 2026 update reported its investment team had visited Nick Scali's new UK stores and met local management, reaffirming confidence in the UK growth opportunity, while its July 2026 update grouped the stock among consumer discretionary names, alongside Eagers Automotive and Zip Co, best placed to benefit once domestic rates pivot toward cuts, even as near-term conditions remain tough for stretched consumers.
Questions
How strong was Nick Scali's recent half-year result?
Auscap Asset Management described Nick Scali's first-half FY26 result as one of its strongest reporting seasons yet, with Australian net profit up 37% year on year and continued gross margin expansion.
Why did Nick Scali shares fall despite strong earnings growth?
Perpetual Asset Management said shares fell 33.5% in the March 2026 quarter because a weaker-than-expected trading update showing softer like-for-like weekly sales overshadowed materially improved gross margins, EBITDA and first-half profit.
Why do fund managers see Nick Scali as attractive for the next rate cycle?
Centennial Asset Management and Wilson Asset Management said Nick Scali, as a quality consumer discretionary name with around 65% of GDP tied to household spending, is well placed to benefit once the RBA begins cutting interest rates.
13 managers, 33 comments, with each manager's latest recorded position.
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