Earnings season is up and running with leading ASX 200 companies across all sectors unveiling their results throughout August.
And this morning, furniture retailer Nick Scali Limited (ASX: NCK) revealed its results for FY25.
The company's shares have already enjoyed a strong run this year, climbing from $14.81 each at the start of January to $19.17 apiece at Thursday's close.
This represents a healthy 29.4% gain for investors in this ASX 200 retail stock.
For context, the All Ordinaries Index (ASX: XAO) has grown by 7% over the same timeframe.
However, today's results have given Nick Scali an additional boost, with its shares rocketing to a record high of $20.82 at the time of writing.
This marks an eye-catching 8.6% surge from yesterday's close.
Let's take a closer look at what's driving this momentum.
Mixed performance
Nick Scali's Australia and New Zealand (ANZ) operations delivered a somewhat subdued performance in FY25.
Revenue of $453.5 million dipped by 1.4% from the previous year, with underlying net profit after tax (NPAT) of $73.2 million tumbling by 12.3%.
However, the group's expansion into the UK market appears to be showing signs of traction.
Nick Scali entered the UK market by acquiring Fabb Furniture in May last year, and has since embarked on a refurbishment and rebranding program of 20 stores.
Following the refurbishment of four UK stores in the first half of the fiscal year, eight more have now been repurposed under the Nick Scali brand.
This store rebranding program is due for completion in the first half of FY26.
In FY25, UK revenue rocketed by nearly 400% year-on-year to reach $41.8 million, with the gross margin also improving by 510 basis points to 47.1%.
And this gross margin improvement appears to be trending in the right direction.
Nick Scali Managing Director and CEO, Anthony Scali, said:
Our UK expansion continues to progress with 12 stores now refurbished and rebranded. Trading performance in the rebranded Nick Scali stores for May and June is now achieving a gross profit margin of 58%, compared to 42% at acquisition.
That said, the company revealed an $11.2 million net loss after tax for its UK operations.
All up, total group revenue of $495.3 million for the fiscal year grew by 5.8% from the twelve months prior.
However, underlying NPAT of $62 million dipped by 24.4%, with underlying operating earnings (EBITDA) of $159.1 million also sliding by 9.1%.
That didn't stop the company from declaring a fully franked final dividend of 33 cents per share for FY25.
Expansion opportunity
Overall, the company has identified a long-term opportunity of up to 86 Nick Scali stores and as many as 100 Plush stores in the UK.
For context, it ended June with 20 UK stores.
It is also targeting a long-term opportunity of between 180 and 200 stores in the ANZ region, compared with 110 outlets at the conclusion of FY25.
What next for this ASX 200 retail stock?
Nick Scali appears to be entering FY26 with positive momentum.
In the ANZ region, the company reported a 7.7% year-on-year increase in written sales orders for July, with like-for-like sales also rising by 7.2%.
As a result, first-quarter revenue for FY26 is expected to exceed the total in the same period last year.
Five new store openings are also confirmed for the ANZ region, with additional opportunities under consideration.
In the UK, losses are expected to continue until refurbishment of the remaining stores is concluded and individual store sales improve.
The ASX 200 retail stock is now targeting increased marketing spend to boost sales and establish the Nick Scali brand in the UK.
