The Nick Scali Ltd (ASX: NCK) share price has surged 185% over the past five years. Over the past three months alone, it has climbed 30.29% from a dip in late April. At the time of writing, it is trading 1.84% higher at $18.84 a piece.
The household furniture retailer and importer has enjoyed robust demand and produced strong financial results over the past year. And broker Macquarie Group Ltd (ASX: MQG) is positive that there could be more to come.
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Nick Scali shares poised for more growth
In a recent note to investors, Macquarie confirmed its outperform rating on Nick Scali shares. It also kept its 12-month target price unchanged at $19.90. This represents a potential 5.62% upside for the retailer's share price from $18.84 at the time of writing.
Foot traffic in Nick Scali ANZ stores in the 2025 calendar year was weaker in January, with written sales orders down 8.5% year-on-year, the note explains.
This foot traffic improved into February and March, consistent with commentary that the final week of January sales were +5% versus the prior corresponding period. Foot traffic increased sharply into June and July, reaching peak 2022 levels.
"Strong foot traffic data for Nick Scali in the ANZ region bodes well for FY25e sales," the broker said.
The retailer's UK acquisition pays off
The broker also continues to see upside in gross margin driven by products in its UK stores, with consensus well below its forecasts. And more UK store openings could drive forecasts even higher. Nick Scali acquired UK-based Fabb Furniture in April last year. The acquisition provided an immediate entry point into the large UK market with a 21-store network across key locations.
"UK GM% has improved significantly since acquisition, +410bps to 45.1%. We expect further GM% expansion in the UK, improving to 58% in FY27e, at mid-point of management's target range. VA consensus forecasts only 55% in the UK in FY27/28e, well below target range of 57-59%. We expect upside to consensus forecasts should GM% reach target range once Nick Scali product is delivered to stores," the note said.
"11 stores have been refurbished under Nick Scali branding, with management expecting 12 in FY25e. The rebranded stores in the UK were the top three performing stores in Jan-25 for written sales orders. Further upside potential from store rollout in the UK, with our current forecasts not expecting any UK store rollout," the broker added.
