Fund Manager Summary
The fund managers believe that Nick Scali Limited's entry into the UK market through its acquisition of Fabb Furniture presents a promising opportunity. In their opinion, despite general skepticism towards overseas expansions, the specific circumstances surrounding this move suggest a positive outlook. They note that the acquisition aligns with Nick Scali's growth strategy and could enhance its market presence. The fund managers express optimism regarding the potential benefits this expansion may bring, reinforcing their confidence in the company's future performance.
Source: Trading View
Commentary From The Managers
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Antares Capital
31 Oct 2025
$25.42
Summary
- Antares Capital decided to bank profits by selling their investment in NCK.
- The decision was influenced by increasing UK economic headwinds.
- There is a growing probability that the Reserve Bank will not cut rates again in Australia.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Antares Capital
31 Oct 2025
$25.42
- Antares Capital decided to bank profits by selling their investment in NCK.
- The decision was influenced by increasing UK economic headwinds.
- There is a growing probability that the Reserve Bank will not cut rates again in Australia.
Summary
Perpetual Asset Management
31 Oct 2025
$25.42
- Nick Scali delivered strong results for investors in October, rallying 10.4% following the release of results showing an underlying profit of $62.0 million over the financial year.
- The company's operations in Australia and New Zealand demonstrated exceptional quality with order growth accelerating and gross margins exceeding expectations.
- This performance reinforces the strength of Nick Scali's core franchise.
- However, the UK expansion faced headwinds, with sales performance falling short of expectations.
- Management remains confident in the UK opportunity, citing early signs of conversion success in select locations.
- The timeline to profitability in the UK has been extended, with break-even now pushed further out.
- Despite mixed geographic results, the underlying resilience of the ANZ business positions the company well.
- Management's disciplined approach to cost control and inventory management is crucial for navigating the current retail environment.
- Perpetual Asset Management continues to hold because of the company's potential for long-term growth across both established and emerging markets.
Summary
Airlie Funds Management
30 Sept 2025
$23.36
- Nick Scali reported exceptionally strong same-store sales across its Australian network in 2H25 (+21%).
- Sales momentum is continuing into FY26, with written sales orders up 9% in July compared to the previous corresponding period (pcp).
- The Company’s expansion into the UK is starting to bear fruit, leading to a material increase in gross margin on refurbished stores.
- The stock traded up to a valuation of ~27x P/E, prompting Airlie Funds Management to modestly size down their position.
Summary
Auscap Asset Management
24 Sept 2025
$23.51
- Nick Scali (NCK) demonstrated strong performance following a solid trading update.
- The market had anticipated a weaker consumer environment, but Nick Scali is showing that high-quality operators can succeed even in challenging cycles.
- Margins held up better than expected, indicating robust operational efficiency.
- Written sales were stronger than anticipated, reflecting continued consumer interest.
- The integration of Plush is progressing ahead of expectations, contributing positively to overall performance.
- Despite a slowdown in consumer spending, Nick Scali continues to gain market share.
- The share price increased significantly following the announcement of the trading update.
- Vertium recognizes the company’s consistent execution and strong balance sheet.
- High return on equity underscores the effectiveness of the management team.
- Overall, Nick Scali is viewed as a well-managed retailer that continues to exceed expectations.
Summary
Bennelong Australian Equity Partners
8 Sept 2025
$24.35
- Bennelong Australian Equity Partners continues to hold a positive view on Nick Scali.
- Nick Scali is regarded as a standout in the retail sector.
- The passion and dedication of Anthony Scali towards the business is evident.
- The company is expanding its footprint in the UK by acquiring Fabb Furniture.
- Stores are being rebranded under the Nick Scali name.
- Recent visits to the rebranded stores have shown them to be impressive and distinct from competitors.
Summary
Antares Capital
31 Aug 2025
$23.98
- Nick Scali (NCK) reported a strong sales recovery in Australia, supported by lower interest rates.
- Antares Capital notes expectations of further rate cuts contributing to positive sales momentum.
- A significant improvement in gross sector allocation margin within the UK business was observed.
- This improvement is considered a key driver of long-term value for NCK.
- Antares Capital continues to hold its position based on these positive developments.
Summary
Perpetual Asset Management
31 Aug 2025
$23.98
- Nick Scali delivered strong performance for investors in August (+ 26.3%) following the release of results.
- Australian and New Zealand operations demonstrated exceptional quality with accelerating order growth and gross margins exceeding expectations.
- Reinforced strength of its core franchise in the ANZ market.
- UK expansion faced headwinds with sales performance falling short due to refurbishment disruptions.
- Operational challenges in newly converted stores impacted UK performance.
- Management remains confident in the UK opportunity, citing early signs of conversion success in select locations.
- Timeline to profitability in the UK has been extended, with break-even pushed further out.
- Underlying resilience of the ANZ business positions the company well in the current retail environment.
- Management's disciplined approach to cost control and inventory management supports longer-term growth strategy across established and emerging markets.
Summary
Antares Capital
30 June 2025
$18.21
- Antares Capital initiated a position in Nick Scali Limited (NCK) as part of a delayed switch from JB Hi Fi, primarily due to valuation concerns.
- The fund manager identifies a compelling opportunity in NCK due to the widening spread in multiples between NCK and JB Hi Fi.
- NCK is a founder-led business focused on long-term value, with management taking measured risks and demonstrating good stewardship of third-party capital.
- The family still owns approximately 8.0% of issued capital, indicating alignment with shareholders.
- Management has overseen gross profit growth of nearly 10.0% CAGR since before COVID, while expanding gross margin from around 60% to 65%.
- Despite challenging Australian retail conditions, Antares Capital believes the worst is easing, with inflation stabilizing and wages growing.
- Recent data shows a lift in interest rate-sensitive spending, indicating potential for increased discretionary spending.
- Antares Capital sees a path to more interest rate cuts, which could enhance disposable income and drive housing spending.
- Sales growth acceleration is expected to leverage bottom-line improvements and lead to significant EPS upgrades.
- NCK's recent entry into the UK market provides optionality, with potential for material uplifts to gross margin as scale builds.
- The UK population is twice that of Australia, presenting greater opportunity, although the UK retail environment is competitive and challenging.
- Antares Capital views NCK's measured approach to capital as a positive factor in navigating the UK market.
Summary
Airlie Funds Management
30 June 2025
$18.21
- Nick Scali is a direct to consumer upholstery retailer operating under two brands: the core Nick Scali brand and Plush furniture.
- The company has 108 showrooms across ANZ, focusing on the mid-to-premium market.
- Owner-managed by Anthony Scali, who has led the business for two decades and owns 8% of the company.
- Recently entered the UK market with the acquisition of Fabb Furniture.
- Nick Scali has shown strong performance, contributing +2.4% to gross Fund performance despite challenges in the ANZ business.
- Challenges include freight cost increases and delivery delays affecting margins, viewed as temporary with expectations for recovery.
- Early signs of success in the UK expansion, with gross margins expanding strongly and products resonating with consumers.
- The top-selling couch is the same across both the UK and ANZ markets, indicating strong brand consistency.
- Rebranded Nick Scali stores are among the top performers in the UK network.
- Insights from Vinay Ranjan of the Airlie investment team, who visited the UK expansion earlier this year, were shared in the March 2025 Quarterly report.
Summary
Airlie Funds Management
31 Mar 2025
$15.81
- Nick Scali has been a long-term holding in the Fund.
- The business has a net cash balance sheet and a market-leading position in the sofa category.
- Best-in-class operating margins are a key characteristic.
- Founder-led management team with Anthony Scali leading for 20 years.
- Valuation remains attractive.
- In April 2024, Nick Scali entered the UK market by acquiring Fabb Furniture.
- Fabb was acquired for just £2, with A$50m raised for refurbishments and working capital.
- This entry into the UK is considered a low-risk opportunity.
- Initial customer response has been positive, with unique product offerings compared to local competitors.
- Adjustments to product sizes are needed for the UK market.
- Six stores have been converted to the Nick Scali format, located in high foot traffic retail parks.
- UK market offers significant opportunity with ~30m dwellings compared to ~11m in Australia.
- Management expects higher sales per square metre in the UK due to population density.
- Conversion rates are solid at ~75%, but brand awareness is still growing.
- Interest-free credit options are popular in the UK, unlike in Australia.
- Operating cost synergies realized by reducing Fabb's headcount significantly.
- Nick Scali has improved gross margins from Fabb's 41% to expected high 50s as they sell more of their products.
- Overall, there is optimism for brand traction in the UK market.
Summary
Airlie Funds Management
30 Sept 2024
$16.60
- Nick Scali posted a solid performance in a challenging retail environment.
- Excluding losses related to the UK expansion, the company delivered profit before interest and tax of $131m for FY24, a decline of 15% on the prior year.
- Supported by the acquisition of Plush Furniture, Nick Scali has grown profit before interest and tax at a 17% compound annual growth rate over the past five years.
- At the current share price, Nick Scali trades on a trailing twelve-month P/E of around 16x, representing a steep discount to the Small Ordinaries Index.
- This P/E is about in line with the company’s ten-year average P/E.
- Notably, this valuation does not account for the potential of the UK expansion, offering a free option on a venture that could surpass the scale of its Australian operations.
Summary
Airlie Funds Management
31 July 2024
$15.69
- Airlie Funds Management remains optimistic about Nick Scali’s recent acquisition of Fabb Furniture for UK expansion.
- The acquisition is considered a low-cost venture, with total costs around $50m, roughly 5% of Nick Scali’s market cap.
- Past acquisitions, like Plush in 2021, have shown management’s ability to create value through strategic improvements.
- The Fabb Furniture acquisition aims to refurbish and leverage existing supply chains to enhance gross margins.
- Anthony Scali, a talented retailer, remains involved, holding ~8% of the company, reinforcing confidence in management.
- The UK furniture market is twice the size of Australia’s, presenting significant growth potential for Nick Scali.
- Given these factors, Nick Scali continues to be a core holding in the Airlie Small Companies Fund.
Summary
Airlie Funds Management
30 June 2024
$13.40
- Nick Scali has entered the UK market through the acquisition of Fabb Furniture.
- Airlie Funds Management is usually sceptical of overseas expansions but has reasons for optimism regarding Nick Scali.
- Further insights are available in the Nick Scali stock story as part of the Airlie Year in Review 2024.
Summary
Wilson Asset Management
28 Feb 2024
$14.59
- Nick Scali is one of Australia's largest furniture retailers.
- In February, the company announced its FY2024 half-year results which beat market expectations.
- Nick Scali achieved a net profit after tax (NPAT) of $43 million for the half year, exceeding guidance of $40 to $42 million.
- This performance was driven by improved gross profit margins.
- The company noted a 3.6% increase in sales orders in January compared to the prior year.
- This increase exceeded analyst expectations.
- Wilson Asset Management is pleased with the solid half-year result from Nick Scali.
- They are positive about the company's long-term target of establishing 86 Nick Scali stores and 90 to 100 Plush stores.
- There is potential for earnings accretive acquisitions outside Australia due to the company’s strong balance sheet.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"While overseas expansions often raise eyebrows, Nick Scali's strategic move into the UK with Fabb Furniture appears to present a compelling opportunity. This could redefine their growth trajectory, if executed wisely."
Last Updated: 31 Oct 2025
Query The Data
Frequently Asked Questions
Who is investing in Nick Scali Limited (ASX:NCK)?
Fund managers including Airlie Funds Management, Antares Capital, Wilson Asset Management, Bennelong Australian Equity Partners, Perpetual Asset Management and Auscap Asset Management have invested in Nick Scali Limited (ASX:NCK).
Why do fund managers invest in Nick Scali Limited?
Fund managers have invested in Nick Scali Limited due to its strategic entry into the UK market through the acquisition of Fabb Furniture. This move is viewed positively despite general skepticism towards overseas expansions, as it indicates potential for growth and diversification. The optimism is supported by the company's solid performance and strategic planning, making it an attractive investment opportunity.
What happened to Nick Scali Limited (ASX:NCK)?
Fund managers have invested in Nick Scali Limited due to its strong performance in the Australian and New Zealand markets, where the company has demonstrated exceptional order growth and gross margins. The successful integration of acquisitions, particularly in the UK, suggests potential for long-term value despite current operational challenges. Fund managers appreciate the company's disciplined cost control, strong balance sheet, and ability to outperform in a softer consumer environment, reinforcing confidence in its growth strategy.