Nick Scali warns

Nick Scali produced a good result today:

But this spoiled the party:

Looks like the consumer retrenchment that began in December got worse in January. Not that the market read that bit, gapping up instead of down!

 

Comments

  1. not sure why the quality of their furniture is, well less than ave. (could use some other words not fit for consumption) Try A Mart or Fantastic their quality will be better.

      • I guess now you know just how bad I consider the quality of their goods based on my personal experience with purchases

      • Sounds awful Hanei. Sorry to hear it.

        My Nick Scali couch is still going ok after 10 years, which you would expect for a couch – have no other experience with them but Iā€™m happy to believe they are sometimes dodgy. Fantastic is a cheaper price point – in that market I would suggest IKEA instead, all day long!

      • I’ve bought one piece of furniture from Fantastic Furniture and it was crap.

        Within a year the foam had collapsed and you had to be careful where you sat on it incase you got a support brace up your clacker.

        Tried to sell it on GumTree and could only $25 for it. If I hadn’t got that for it the next step was the Salvo’s for the one year old sofa.

  2. Furniture sales are directly correlated to owner occupier home sales. Especially first home buyers. So NCK is benefitting from the increase in FHB in the market, who are spending their increased FHB cash grants on furniture. When FHB disappear from the market, then the likes of NCK will too. Anyone got an updated FHB volume chart? (not % because thats bogus, need absolute numbers).
    (Interestingly, the correlation is because of a behavioural finance trait – if you have just dropped $500k on a house, spending a further $20k on furniture seems completely normal. As opposed to someone just wandering into a store and deciding to buy $20k of furniture).

  3. I just looked at the Nick Scali website and the furniture looks good – but there are no prices, none at all.

    That’s really annoying. I don’t want to have to call a store to get a price. Whats the point in having a website if its not ecommerce ready?

    • kiwikarynMEMBER

      I was wondering if they have an “AirBnB Package” to offer to all those vendors who can’t sell their houses.

  4. Yes, their margins are amazingly high, however this leaves them very exposed once the Muppets with too much money and not enough sense disappear from the market, now that their houses are dropping in price.
    They will then find themselves competing for the value shopper (nb price-centric) instead, who will not pay more for something they can get cheaper from any number of other furniture retailers.
    In addition to this, I would certainly not be looking to open new retail stores in the face of the housing correction we’ve just kicked off. They are just signing up for more fixed cost they are just going to have to spend more money to get rid of once they start closing stores.
    Anyway, the smartest thing Anthony Scali has done in the past 12 months is sell half of his 27% of the business to the Chinese for $77m. That assumes a valuation of $570m against NPAT of around $48m…that’s an awesome multiple for a retail business right before the reckoning. Well played sir!
    You just need to work out how to get the other $77m over the next couple of years, before the economy sends them guts up!