Nick Scali shares (ASX: NCK) fell more than 15% on Thursday, one of the worst days in memory, as the company issued a first-half guidance update that fell well short of expectations. There is mounting pressure on discretionary retailers, and particularly those exposed to Australia’s prolonged housing market downturn.
The Nick Scali share price gapped sharply lower at the open, falling from A$14.21 to A$11.50 before touching an intraday low of A$10.93, a level not seen since 2023. There was a partial recovery through the session to close at A$12.03, with a loss of 15.34% on the day extending the YTD pullback to 49%. It’s been tough to be a NCK bull this year, with any attempts to bounce off lows being met with further selling as the macro deteriorates. This latest move lower however can be clearly put down to the company’s own update.
Why are Nick Scali shares down so much?
Nick Scali’s 1H FY27 trading update flagged underlying Group Net Profit After Tax (NPAT) of between A$28 million and A$32 million for the six months ending December 31, 2026. At the A$30 million midpoint, this represents a shortfall of approximately 20% against the A$37.6 million consensus estimate, a miss wide enough to force a meaningful reset of full-year earnings models across the market.
The weakness is concentrated in Australia and New Zealand, where written sales orders fell 15% year-on-year in the September quarter. That figure is particularly striking when set against the 11% growth recorded in the same period a year earlier, representing a swing of roughly 26 percentage points in the space of twelve months.
In-store foot traffic declined by approximately 10% year-on-year, and ANZ first-half revenue is now expected to fall between 11% and 14% compared with the prior corresponding period. Elevated interest rates, a cooling residential property market, and subdued consumer confidence have combined to suppress demand for big-ticket home furnishings, a category that tends to move closely with housing turnover and renovation activity. With comments this week from RBA officials raising the odds of a fifth hike to ~50% in November, that backdrop could get even worse.
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Compounding the operational headwinds, a cybersecurity incident in August forced Nick Scali to take its core enterprise resource planning systems offline for approximately three weeks. While retail showrooms remained open during the disruption, order processing and logistics were handled manually, introducing friction into the customer experience and supply chain at a critical point in the trading calendar. The company incurred approximately A$980,000 in direct legal, technical, and consulting costs related to the incident, which have been excluded from the underlying profit figures.
UK operations are a more positive note, as written sales orders in the UK rose 29% year-on-year in the first quarter of FY27, with like-for-like orders up 14%, a result that reflects the early payoff from store refurbishments and rebranding work undertaken following the acquisition of Fabb Furniture. The company plans to open one new UK store in late December, supplementing two new ANZ store openings completed in July, as the company maintains its multi-region expansion strategy despite the near-term earnings pressure.
Price Target Cut, With Bullish Tone
Macquarie was among the first major brokers to update its numbers following the guidance release, cutting its 12-month price target by 14% to A$15.20 and reducing its FY27 earnings per share forecast by 24%. Despite the scale of those revisions, Macquarie retained its Outperform rating on the stock, with analysts characterising the earnings shortfall as a function of cyclical volume compression rather than structural margin deterioration.
The question now is how long, and how deep the ANZ housing downturn goes. There are pockets of positivity for bulls to cling to, yet after a 49% drawdown in 2026, momentum is firmly with the bears for now.
Bull Case:
- UK written sales orders surged 29% year-on-year, demonstrating strong international growth momentum.
- Macquarie retains Outperform rating, viewing the earnings miss as cyclical, not structural.
- Gross margins remain resilient, preserving significant earnings leverage for any demand recovery.
Bear Case:
- ANZ written sales orders fell 15% year-on-year, a sharp reversal from prior growth.
- 1H FY27 NPAT guidance misses consensus by approximately 20% at the midpoint.
- Cyber incident disrupted core systems for three weeks, adding costs and operational friction.
