There are not many businesses I'd describe as one of Australia's top shares. However, Nick Scali Ltd (ASX: NCK) is one company I'd place in that category.
Nick Scali operates Nick Scali stores in Australia, New Zealand and the UK. It also has Plush stores in Australia.
As the chart below shows, it's down 36% since 27 January 2026, which is a big fall for any business.
After such a large fall for a company like this, I think this is a rare buying opportunity for a great business for a few reasons.
Image source: Getty Images
Rising profit margin
For a furniture retailer, I think Nick Scali has a very pleasing gross profit margin. In its recent FY26 results, the company noted that its group gross profit margin grew from 63.5% in FY25 to 65.6% in FY26.
Impressively, the Australia and New Zealand (ANZ) gross profit margin improved from an already high 65% to 66%.
But even more importantly, the UK gross profit margin increased significantly from 47.1% to 60.3%. This is a great sign that Australian Nick Scali products are resonating with international customers – it noted that the best sellers in the UK are in line with those in Australia.
The improvement in the UK gross profit margin reduced the net loss in the UK business to $4.8 million, down from $11.2 million in FY25.
Nick Scali's overall underlying net profit increased 22.1% to $75.7 million in FY26, helping fund a 30% increase in the annual dividend per share to 78 cents.
Store network rollout potential
Nick Scali has outlined that its total store count could grow significantly in the long-term, which I believe could add significant scale benefits to the business.
In ANZ, the company had 114 stores as of July 2026 across its Nick Scali and Plush brands. It thinks it could reach between 180 and 200 stores, suggesting potential for growth of between 58% and 75%.
While in the UK, it had 18 stores in July 2026, with a suggestion it could rise to between 60 and 70 stores, implying (in percentage terms) an increase of 233% to 288%.
Considering that the UK has more than double Australia's population, I think the UK's revenue opportunity is very compelling.
Cyclical opportunity
I'd describe this as a rare buying opportunity because of how cyclical consumer spending and investor confidence can be. It's not often that the Australian economy dips, yet we can buy one of Australia's top shares for significantly less than it traded at in January 2026.
The phrase 'buy low, sell high' is a bit of a cliché, but I think this is a great chance to buy Nick Scali while it's trading at a lower valuation.
According to the projection on Commsec, the Nick Scali share price is valued at 17x FY28's estimated earnings and 15x FY29's estimated earnings.
