Nick Scali cuts payout as sales and growth stall

Furniture retailer Nick Scali has posted its weakest profit growth since 2014.

Nick Scali CEO Anthony Scali. Picture: Chris Pavlich

Furniture retailer Nick Scali has posted its weakest profit growth since 2014 and cut its final dividend by 16.7 per cent, warning same-store sales were flat for most of financial 2019, with some decline in the fourth quarter that has continued into 2020.

The retailer said while there was a favourable economic environment of very low interest rates and low unemployment, combined with the recent tax cuts, there was uncertainty as to whether this would translate to a lift in consumer confidence.

Nick Scali shares rose 5.5 per cent to $6.48 yesterday.

Sales revenue for 2019 rose 6.9 per cent to $268 million, while full-year net profit was up just 2.8 per cent to $42.1m, the smallest in five years and a steep decline on the 10 per cent profit growth in 2018.

Currency headwinds made its imported furniture more expensive, but gross margins strengthened 20 basis points to 62.9 per cent, driven by new product initiatives. Operating expenses as a percentage of sales increased, as higher wages and property costs outpaced sales.

Nick Scali cut its final fully franked dividend to 20c a share from 24c, payable on October 29. Total dividends for the year hit 45c, up from 40c in 2018.