The S&P/ASX 300 Index (ASX: XKO) is up 0.6% on Monday, but this ASX 300 stock is heading the other direction.

Shares in furniture retailer Nick Scali Ltd (ASX: NCK) closed Friday at $15.12 and are currently trading for $14.32, down 5.3%.

This underperformance comes on the heels of the company's AGM address and a trading update that appears to have underwhelmed investors.

Here's what's going on with the ASX 300 stock.

ASX 300 stock tanks on declining profit expectations

Commenting on the 2024 financial year at the AGM, Nick Scali managing director Anthony Scali said, "Nick Scali Limited performed strongly in the year, with revenue and gross profit stabilising post covid."

On the growth front for the ASX 300 stock, he noted, "In May the company completed an acquisition in the UK of Anglia Home Furnishings Limited trading as Fabb Furniture, which will allow it to expand the brand globally."

The company had a combined store network of 128 showrooms at the end of June.

Scali said the 7.8% year on year decline in FY 2024 revenue to $468.2million was largely due to the increased deliveries achieved in FY 2023 "as the June 2022 order bank reduced with lead times returning to pre Covid levels".

He noted that FY 2024 gross margin for Australia and New Zealand increased by 2.5% to 66.0%.

However, costs were also up, with underlying operating expenses in the current year increasing by $3.1 million.

Turning to the current half year, written sales orders for the four months of June to September 2024 were 3.0% year on year. The company anticipates delivered sales revenue for the first half of the new financial year for Australia and New Zealand to come in between $217 million and $222 million.

The ASX 300 stock is likely catching some tailwinds today, with the company forecasting a 2.40% reduction in its gross profit margin for the half year due to higher freight rates.

As for what that means for net profits for the current half year (H1 FY 2025), Scali said:

Following the significant increase in freight and subject to any unforeseen shipping delays, we currently expect our NPAT [net profit after tax] for Australia and New Zealand in the first half to be in the range of $30-33 million.

We continue to expand the store network and re-confirm our August guidance to open two Nick Scali stores and three to five Plush stores in FY25, with the majority opening in the second half.

To put that in some perspective, the ASX 300 stock reported NPAT of $43 million for H1 FY 2024. Meaning even the upper end of its new guidance comes in 23% lower year on year.

Nick Scali share price snapshot

Despite today's slide, shares in the ASX 300 stock remain up an impressive 34% over 12 months.