The collapse of a freight forward and customs company threatens Nick Scali profit
The furniture retailer is facing significant delivery delays after being forced to go to Federal Court to secure shipping containers.
Furniture retailer Nick Scali has warned the collapse of one of its freight forwarders and customs agents has led to a number of its containers being delayed at ports, triggering possible delivery delays and threatening the company’s ability to hit first-half earnings targets.
Nick Scali said on Wednesday that due to the delays, the company now expects to incur unexpected additional storage and detention costs for the containers which cannot be quantified at this time.
These unexpected delays and costs are adding significant additional risks to the company’s ability to achieve its prior guidance of net profit for Australia and New Zealand in the first half of 2025 of between $30m and $33m, the company said.
To resolve the issue Nick Scali has made an application to the Federal Court to seek orders for the shipping lines to release the company’s containers through the giving of certain undertakings.
“With the Court orders now granted, the company is working to have these containers delivered to its Distribution Centres to allow delivery of the goods to its customers as soon as practicable,” Nick Scali said in an ASX statement.
Previously, The Australian reported that Nick Scali took collapsed shipping and freight line Lion to court in late October, arguing for the release of furniture held up on Australian docks by Lion’s failure to pay its own bills.
Justice Angus Stewart ordered the retailer to pay the $US1.3m ($2m) it still owed to Lion, and come back to court if the freight company still failed to deliver.
On Wednesday Nick Scali chief executive Anthony Scali told The Australian, despite the furniture retailer paying the money to secure its goods, Lion then failed to deliver all of the furniture from the shipping containers with a portion of its goods yet to be delivered to it.
But, the impact of the extra charges to release his own goods was unknown, hence the threat to first-half profits.
“The containers are getting released and as they are released we see the port charges and we are trying to negotiate that, but it is really hard to know and hard to tell,” Mr Scali said.
Mr Scali said insurance wouldn’t cover the extra costs.
“It is very complicated what has happened and it is a certain amount of containers, we have already received quite a few containers back now already but there are still quite a few to go … the containers we have received already the charges weren’t that bad but there are still quite a few to go and we are just being careful.”
Nick Scali shares closed down 2 per cent at $13.80.
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