Home buyers furnishing new residences thanks to Australia’s strong housing market

Lilly Vitorovich
(Australian Associated Press)

Nick Scali’s sofas, dining and coffee tables are selling like hot cakes, thanks to Australia’s strong housing market.

The company – which operates under the Nick Scali and Sofas2Go brands – has posted a 45 per cent jump in first-half net profit, driven by a 15.5 per cent rise in revenue.

Excluding three new stores opened in the six months to December 31, comparable sales rose 10.1 per cent over the six month period.

Nick Scali said the strong performance has continued into January – traditionally its biggest trading month of the year for sales orders – reporting continued double digit growth in both total sales and comparable store sales.

“The company expects market conditions for the second half of the 2017 financial year to remain favourable,” Nick Scali said on Tuesday in its interim earnings statement.

Nick Scali, like its bigger rival Harvey Norman, are benefiting from home buyers furnishing new residences, while elsewhere retail is flat, with a number of clothing retailers recently collapsing.

In recent weeks, the owners of Herringbone, Rhodes and Beckett, Marcs, David Lawrence, Pumpkin Patch and Payless Shoes have called in the administrators.

Harley Dale, chief economist for the Housing Industry Association, said the housing market was “very healthy” on the eastern seaboard, particularly in NSW and Victoria, last year.

“New home buildings conditions have been very strong and there’s absolutely no doubt that it has contributed to some strong demand in areas of retail that benefit from housing,” Mr Dale told AAP.

Residential building approvals have been almost 50 per above their long-term average over the past two years, supported by low interest rates, population growth and rising housing prices, particularly in the eastern states, according to the Reserve Bank of Australia.

In the six months to December 31, Nick Scali opened a store in Hobart – its first in Tasmania – Geelong and Jandakot, its fifth store in Western Australia.

The group expects to open between two to three stores before June 30 and forecast a “promising pipeline” of new stores for the next financial year.

Net profit surged to a record $20.5 million for the six months to December 31 from $14.1 million a year earlier,.

Nick Scali also hiked its interim dividend by 55 per cent to 14 cents a share.

The news was well received by investors, with Nick Scali shares hitting a record high, peaking at $7.25 in early morning trade on the Australian stock exchange.

At 1548 AEDT, the stock was up 66 cents, or 10.3 per cent, at $7.09, valuing the company at $581.6 million.


*Net profit rose 45pct to $20.5m

*Revenue jumped 15.5pct to $118.4m

*Interim dividend rose 55pct to 14c a share, fully franked


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