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West Australian
4 days ago
- Business
- West Australian
Nick Scali insists there is ‘pathway to profitability' for British stores as it posts profit slump
Nick Scali shares have surged to record highs after its boss insisted there was 'a pathway to profitability' for the furniture chain despite being weighed down by its British stores. Kicking off reporting season for the retail sector on Friday, Nick Scali revealed a 5.8 per cent lift in revenue to $495.3 million for the 2025 financial year, as profit slumped 28.3 per cent to $57.7m, a result attributed to its loss-making British stores. The company acquired British furniture chain Fabb early last year and is in the process of rebranding the 21 stores in its network under the Nick Scali brand. While it already warned sales at the British stores would be impacted amidst the refurbishments, the group revealed the extent of the losses had widened to $11.2m, from a loss of $1.4m a year ago. It took a $33.9m hit to UK written sales orders 'caused by stores closed for refurbishment for long periods and the continuous clearance of old Fabb product range being sold from showrooms and warehouse inventory'. But Nick Scali chief executive Anthony Scali said there was a 'pathway to profitability' for the British stores and there was 'contingent belief that the product is right for the UK'. So far, 12 stores have been refurbished and rebranded, with the remaining expected to be completed during the first half of the 2026 financial year. Mr Scali said the rebranded stores have already delivered a 58 per cent gross profit margin for May and June, compared with 42 per cent at acquisition. Mr Scali said based on recent average sales per Nick Scali store in Britain, each store would need to lift sales by $10,000 a week, or an additional 2.5 orders per week, to begin contributing profits to the group. Despite the near-30 per cent profit slump, investors chose to focus on Nick Scali's potential for growth, sending shares 8 per cent higher to $20.70 just after 1pm. 'I'm confident with the right sales team, we're going to get the uplift in sales,' Mr Scali told investors on a call. In Australia and New Zealand — which accounts for the majority of Nick Scali's sales with over 60 stores — sales fell 1.4 per cent to $453.5m for 2025, while net profit slumped 12.3 per cent. Nick Scali said sales in Australia and New Zealand grew by 7.7 per cent in July. It expects sales revenue for the first quarter of the 2026 financial year to be up on the prior year. MLC Asset Management senior portfolio manager Anthony Golowenko said Nick Scali appeared to have a good growth trajectory and the company was making steady progress in building its business in the UK. 'This is setting the scene for a solid (2026 financial year), more favourable customer demographics, and likely rate cuts adding to consumer confidence,' he said. Nick Scali declared a final dividend of 33¢ a share.
Sydney Morning Herald
29-06-2025
- Business
- Sydney Morning Herald
Donald Trump-induced market chaos won't shred your super balance
First, it's a question of sheer size. The US is simply too big to ignore, and our funds are too big to stay in Australia. The US makes up more than half the world's equity markets by value, so other markets would simply be unable to absorb all the capital if people wanted to move. Australian super funds are also bursting with cash they need to deploy thanks to compulsory super contributions, and they already own more than a quarter of the local sharemarket. But size isn't the only reason the US will probably remain a magnet for super funds. 'The US do probably a better job of turning GDP growth into earnings per share growth, which ultimately is what our members invest in, than most countries around the world.' Cbus chief investment officer Leigh Gavin Another drawcard for big super is US leadership on technology and innovation, including in artificial intelligence, notwithstanding growing competition from China. This is reflected in the eye-popping share prices of the 'magnificent seven' – the giant US tech stocks that have posted huge returns in recent years, even including a more bumpy ride lately. Cbus chief investment officer Leigh Gavin says that even though the US outlook over the next decade is riskier than it was a year ago, he still views the US as 'an amazingly dynamic country with amazingly dynamic and innovative companies'. 'The US do probably a better job of turning GDP growth into earnings per share growth, which ultimately is what our members invest in, than most countries around the world,' Gavin says. This doesn't mean the US will remain quite as dominant in the investment world as it has been. Indeed, there are signs that big investors are keen to spread their bets more widely, including into other regions such as Europe, and other currencies outside the greenback. But throughout the past six months of volatility, there have been few signs super funds are ditching the US in any dramatic way. MLC Asset Management chief investment officer Dan Farmer for example says the fund has been diversifying into Europe because it believes the continent represents better value, but not because the fund believes US exceptionalism is over. 'We spent a bit of time thinking about that question of US exceptionalism because it is a large part of our portfolio and most portfolios,' Farmer says. 'And we've arrived at the conclusion that the US is still an exceptional market for a few reasons – the quality of the businesses in the US. The tech stocks are expensive, yes, but still high-quality businesses.' Loading One thing, Farmer says, that would make the fund really take notice would be a weakening in US institutions such as the Federal Reserve. But although Trump has repeatedly taken potshots at the central bank, Farmer believes its independence is 'still very much intact'. What about geopolitical risk? Are the super giants worried that the many flashpoints in the world – the latest being the Middle East – will have disastrous consequences for markets? Again, big funds are betting that over the long term, geopolitical crises are unlikely to cause lasting damage to markets, unless they inflict a major hit on the world economy. The muted reaction on global markets to the US bombing of Iran is a case in point. Gavin says geopolitical shocks in the past have typically knocked 2 to 10 per cent off share markets (unless they spark a recession). In many cases, markets rebound soon after the initial shock. All of this underlines perhaps the most important lesson from a wild year on markets: staying the course has paid off. Every time there is a market plunge, super funds brace for jittery members to move their money to a safer option such as cash. Given the frequency of scary headlines, it's easy to see why many people get spooked. But the well-known risk of doing this is that you could lock in losses, and miss out on the rebound – which this year was powerful, and took place when Trump paused his tariff plan. With the benefit of hindsight, we now know switching to cash during the 'Liberation Day' chaos would have been a costly mistake. As Trump is still early in his second term, that's worth remembering because it's highly likely his presidency will bring more episodes of volatility for investors. Ross Gittins is on leave.
Yahoo
13-05-2025
- Business
- Yahoo
Analysis-Australia's pension funds start questioning US strategies
By Tom Westbrook and Stella Qiu SINGAPORE/SYDNEY (Reuters) -Funds in Australia's A$4.2 trillion ($2.7 trillion) pension sector are rethinking some of their long-held strategies of buying U.S. assets and the dollar, as confidence in American growth wanes. Volatility around Sino-U.S. trade tensions this year has forced investors to reassess their U.S. exposure and the role of the dollar, which has lately failed to behave as a safe haven currency amid heightened uncertainty around Washington's economic policy. While there have not yet been any major shifts in strategy, currency dealing desks in Australia have noticed modest changes in hedging demand from some pension funds. Those hedging tweaks are under the spotlight globally and Australia's pension funds, known locally as superannuation funds, have long kept low FX hedging ratios on large and growing foreign stock portfolios. When U.S. equities fell, funds allowed hedging ratios to rise by not keeping their currency positions exactly in step with asset prices, said Troy Fraser, head of foreign exchange sales for Australia and New Zealand at Citi in Sydney. "You would expect the funds to be selling Aussie and buying U.S. to adjust or to rebalance their hedge ratio," he said. "We've seen a little bit of that, but not a lot. I think funds are generally happy to be longer Aussie." Fraser said funds were weighing their asset mix, hedging costs and the outright level of the Aussie. Were it to extend it could move the currency, and in separate research Citi in February estimated that a 5% shift in hedging now could push the Australian dollar as much as 11% higher against the greenback. At about $0.64, it's been falling on the dollar for nearly 15 years since touching $1.10 in 2011. Along with a tendency to drop reliably whenever global stocks fell, cushioning losses in Aussie dollar terms, the Aussie's behaviour encouraged a low hedging ratio. Industry-wide hedging on foreign equities was roughly 22% in the December quarter, according to the most recent regulatory data. "Unhedged has worked," said Ben McCaw, a senior portfolio manager at MLC Asset Management. "It was lowering the volatility of the portfolio (and) providing a positive return to the portfolio ... so that was almost the ultimate asset," he said. Now, however, long- and short-term factors are starting to shift how the Australian currency trades. He has been reducing U.S. dollar currency exposure for about three years. Others are keeping a watching brief. CBUS, which manages more than A$100 billion, has kept currency exposure steady but the U.S. dollar, which fell through market turbulence in April, caught the attention of fund CIO Leigh Gavin. "The USD is probably one of the few asset classes that hasn't rebounded from the early April lows, and we think that's interesting," he said. "It's certainly something we're monitoring, but it's still pretty early days." 'QUESTIONING OUR EXPOSURE' Some fund chiefs say U.S. allocations are under review. Australian super funds run a high allocation to equities, by global standards, at nearly 60%, according to regulatory data, with roughly half that abroad, as of December 2024. According to Westpac, some A$555 billion is invested in U.S. stocks by Australian domiciled investors. "That's been a very good place to be investing over the last couple of years," said John Pearce, chief investment officer of A$139 billion fund UniSuper on the fund's podcast in April. "Like every other fund, we are questioning our exposure to the U.S. It would be fair to say that we've hit peak exposure and will be reducing over time," he said. To be sure, no increase in the fund's hedging ratio, which typically swings between 30-40%, is being considered, a UniSuper spokesperson said in emailed remarks to Reuters. And there are very big funds that are not budging in their strategies. "We have no view of changing our hedge position or any of our positions based on that event," said Michael Clavin, head of income and markets at Aware Super, referring to last month's tariff-driven drawdown and market volatility. The chief investment officer of AustralianSuper, the largest super fund with more than A$365 billion under management, also told the Financial Times last month it would continue investing more than half its offshore flows into the U.S. Still, the Aussie's 3% rise against the U.S. dollar this year has meant the year-to-date 0.6% drop in the S&P 500 translates to a near 3.5% fall in Australian dollar terms, which if it persists or extends could start to drive a response. "Being underweight the Aussie dollar has been something which has typically rewarded Australian investors," said Cameron Systermans, head of multi-asset in the Asia-Pacific at fund manager and adviser Mercer. "So if there were to be a durable uptrend in the Aussie dollar, that would be a bit of a pain trade, I think, for a lot of the asset owners in Australia. And it might force them to really reassess whether that still makes sense." ($1 = 1.5625 Australian dollars) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-05-2025
- Business
- Yahoo
Analysis-Australia's pension funds start questioning US strategies
By Tom Westbrook and Stella Qiu SINGAPORE/SYDNEY (Reuters) -Funds in Australia's A$4.2 trillion ($2.7 trillion) pension sector are rethinking some of their long-held strategies of buying U.S. assets and the dollar, as confidence in American growth wanes. Volatility around Sino-U.S. trade tensions this year has forced investors to reassess their U.S. exposure and the role of the dollar, which has lately failed to behave as a safe haven currency amid heightened uncertainty around Washington's economic policy. While there have not yet been any major shifts in strategy, currency dealing desks in Australia have noticed modest changes in hedging demand from some pension funds. Those hedging tweaks are under the spotlight globally and Australia's pension funds, known locally as superannuation funds, have long kept low FX hedging ratios on large and growing foreign stock portfolios. When U.S. equities fell, funds allowed hedging ratios to rise by not keeping their currency positions exactly in step with asset prices, said Troy Fraser, head of foreign exchange sales for Australia and New Zealand at Citi in Sydney. "You would expect the funds to be selling Aussie and buying U.S. to adjust or to rebalance their hedge ratio," he said. "We've seen a little bit of that, but not a lot. I think funds are generally happy to be longer Aussie." Fraser said funds were weighing their asset mix, hedging costs and the outright level of the Aussie. Were it to extend it could move the currency, and in separate research Citi in February estimated that a 5% shift in hedging now could push the Australian dollar as much as 11% higher against the greenback. At about $0.64, it's been falling on the dollar for nearly 15 years since touching $1.10 in 2011. Along with a tendency to drop reliably whenever global stocks fell, cushioning losses in Aussie dollar terms, the Aussie's behaviour encouraged a low hedging ratio. Industry-wide hedging on foreign equities was roughly 22% in the December quarter, according to the most recent regulatory data. "Unhedged has worked," said Ben McCaw, a senior portfolio manager at MLC Asset Management. "It was lowering the volatility of the portfolio (and) providing a positive return to the portfolio ... so that was almost the ultimate asset," he said. Now, however, long- and short-term factors are starting to shift how the Australian currency trades. He has been reducing U.S. dollar currency exposure for about three years. Others are keeping a watching brief. CBUS, which manages more than A$100 billion, has kept currency exposure steady but the U.S. dollar, which fell through market turbulence in April, caught the attention of fund CIO Leigh Gavin. "The USD is probably one of the few asset classes that hasn't rebounded from the early April lows, and we think that's interesting," he said. "It's certainly something we're monitoring, but it's still pretty early days." 'QUESTIONING OUR EXPOSURE' Some fund chiefs say U.S. allocations are under review. Australian super funds run a high allocation to equities, by global standards, at nearly 60%, according to regulatory data, with roughly half that abroad, as of December 2024. According to Westpac, some A$555 billion is invested in U.S. stocks by Australian domiciled investors. "That's been a very good place to be investing over the last couple of years," said John Pearce, chief investment officer of A$139 billion fund UniSuper on the fund's podcast in April. "Like every other fund, we are questioning our exposure to the U.S. It would be fair to say that we've hit peak exposure and will be reducing over time," he said. To be sure, no increase in the fund's hedging ratio, which typically swings between 30-40%, is being considered, a UniSuper spokesperson said in emailed remarks to Reuters. And there are very big funds that are not budging in their strategies. "We have no view of changing our hedge position or any of our positions based on that event," said Michael Clavin, head of income and markets at Aware Super, referring to last month's tariff-driven drawdown and market volatility. The chief investment officer of AustralianSuper, the largest super fund with more than A$365 billion under management, also told the Financial Times last month it would continue investing more than half its offshore flows into the U.S. Still, the Aussie's 3% rise against the U.S. dollar this year has meant the year-to-date 0.6% drop in the S&P 500 translates to a near 3.5% fall in Australian dollar terms, which if it persists or extends could start to drive a response. "Being underweight the Aussie dollar has been something which has typically rewarded Australian investors," said Cameron Systermans, head of multi-asset in the Asia-Pacific at fund manager and adviser Mercer. "So if there were to be a durable uptrend in the Aussie dollar, that would be a bit of a pain trade, I think, for a lot of the asset owners in Australia. And it might force them to really reassess whether that still makes sense." ($1 = 1.5625 Australian dollars)
Yahoo
13-05-2025
- Business
- Yahoo
Analysis-Australia's pension funds start questioning US strategies
By Tom Westbrook and Stella Qiu SINGAPORE/SYDNEY (Reuters) -Funds in Australia's A$4.2 trillion ($2.7 trillion) pension sector are rethinking some of their long-held strategies of buying U.S. assets and the dollar, as confidence in American growth wanes. Volatility around Sino-U.S. trade tensions this year has forced investors to reassess their U.S. exposure and the role of the dollar, which has lately failed to behave as a safe haven currency amid heightened uncertainty around Washington's economic policy. While there have not yet been any major shifts in strategy, currency dealing desks in Australia have noticed modest changes in hedging demand from some pension funds. Those hedging tweaks are under the spotlight globally and Australia's pension funds, known locally as superannuation funds, have long kept low FX hedging ratios on large and growing foreign stock portfolios. When U.S. equities fell, funds allowed hedging ratios to rise by not keeping their currency positions exactly in step with asset prices, said Troy Fraser, head of foreign exchange sales for Australia and New Zealand at Citi in Sydney. "You would expect the funds to be selling Aussie and buying U.S. to adjust or to rebalance their hedge ratio," he said. "We've seen a little bit of that, but not a lot. I think funds are generally happy to be longer Aussie." Fraser said funds were weighing their asset mix, hedging costs and the outright level of the Aussie. Were it to extend it could move the currency, and in separate research Citi in February estimated that a 5% shift in hedging now could push the Australian dollar as much as 11% higher against the greenback. At about $0.64, it's been falling on the dollar for nearly 15 years since touching $1.10 in 2011. Along with a tendency to drop reliably whenever global stocks fell, cushioning losses in Aussie dollar terms, the Aussie's behaviour encouraged a low hedging ratio. Industry-wide hedging on foreign equities was roughly 22% in the December quarter, according to the most recent regulatory data. "Unhedged has worked," said Ben McCaw, a senior portfolio manager at MLC Asset Management. "It was lowering the volatility of the portfolio (and) providing a positive return to the portfolio ... so that was almost the ultimate asset," he said. Now, however, long- and short-term factors are starting to shift how the Australian currency trades. He has been reducing U.S. dollar currency exposure for about three years. Others are keeping a watching brief. CBUS, which manages more than A$100 billion, has kept currency exposure steady but the U.S. dollar, which fell through market turbulence in April, caught the attention of fund CIO Leigh Gavin. "The USD is probably one of the few asset classes that hasn't rebounded from the early April lows, and we think that's interesting," he said. "It's certainly something we're monitoring, but it's still pretty early days." 'QUESTIONING OUR EXPOSURE' Some fund chiefs say U.S. allocations are under review. Australian super funds run a high allocation to equities, by global standards, at nearly 60%, according to regulatory data, with roughly half that abroad, as of December 2024. According to Westpac, some A$555 billion is invested in U.S. stocks by Australian domiciled investors. "That's been a very good place to be investing over the last couple of years," said John Pearce, chief investment officer of A$139 billion fund UniSuper on the fund's podcast in April. "Like every other fund, we are questioning our exposure to the U.S. It would be fair to say that we've hit peak exposure and will be reducing over time," he said. To be sure, no increase in the fund's hedging ratio, which typically swings between 30-40%, is being considered, a UniSuper spokesperson said in emailed remarks to Reuters. And there are very big funds that are not budging in their strategies. "We have no view of changing our hedge position or any of our positions based on that event," said Michael Clavin, head of income and markets at Aware Super, referring to last month's tariff-driven drawdown and market volatility. The chief investment officer of AustralianSuper, the largest super fund with more than A$365 billion under management, also told the Financial Times last month it would continue investing more than half its offshore flows into the U.S. Still, the Aussie's 3% rise against the U.S. dollar this year has meant the year-to-date 0.6% drop in the S&P 500 translates to a near 3.5% fall in Australian dollar terms, which if it persists or extends could start to drive a response. "Being underweight the Aussie dollar has been something which has typically rewarded Australian investors," said Cameron Systermans, head of multi-asset in the Asia-Pacific at fund manager and adviser Mercer. "So if there were to be a durable uptrend in the Aussie dollar, that would be a bit of a pain trade, I think, for a lot of the asset owners in Australia. And it might force them to really reassess whether that still makes sense." ($1 = 1.5625 Australian dollars) Sign in to access your portfolio
