Warren Buffett has been one of the greatest investors the world has ever seen as he (and Charlie Munger) built Berkshire Hathaway into an incredible, globally recognised company. Though, he didn't accomplish that by investing in S&P/ASX 200 Index (ASX: XJO) shares because he's American.
Buffett famously wanted to stay inside his 'circle of competence'. In other words, he only wanted to stick to industries that he understands.
That meant he avoided some sectors like technology, even if that meant missing out on some of the returns.
When looking at the list of businesses that Berkshire Hathaway has invested in and owned over the years, there are a few industries that stick out, with one being furniture. In my view, one of the ASX 200 shares that Warren Buffett would consider if he were Australian is Nick Scali Ltd (ASX: NCK).
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Numerous positives about Nick Scali shares
Nick Scali is one of the larger furniture businesses in Australia, with its Nick Scali and Plush brands. It also has a small Nick Scali UK division which was originally called Fabb Furniture when it was first acquired.
There are a number of things that I'm sure Warren Buffett would want to see.
Growth in the gross profit margin is a pleasing factor because it shows that increasing scale (or another positive factor) is helping. In the FY26 half-year result, the gross profit margin increased from 62.3% last year to 65.4%.
Other profit margins improving are also a great positive. HY26 revenue rose 7.2% to $269.3 million, the operating profit (EBITDA) grew 18.1% to $96.6 million and net profit rose 23.1% to $41 million. As you can see, EBITDA and net profit both increased a lot faster than revenue.
As a bonus, the business is generous when it comes to the passive income. In HY26, the business hiked its interim dividend by 30%.
I think the ASX 200 share would be particularly compelling to Warren Buffett because of how much room for growth the business still has. It could add dozens of stores in Australia (and New Zealand), as well as the UK.
Increased scale could play a significant part in the company's profitability in the coming years.
The valuation numbers are also appealing. According to the projection on Commsec, the Nick Scali share price is valued at 16x FY26's estimated earnings, at the time of writing.
Passive income is expected to increase year-over-year in the 2026 financial year. According to the projection on Commsec, the business is forecast to pay an annual dividend per share of 78.1 cents.
That estimate on Commsec implies a potential grossed-up dividend yield of 7.1%, including franking credits, at the time of writing.
