2204 GMT - The magnitude of a decline in furniture retailer Nick Scali's margins in Australia and New Zealand surprises Citi. Nick Scali has signaled its gross margin is likely to fall 240 basis points in 1H. In a note, analyst Sam Teeger says the margin deterioration probably isn't permanent and seems to be related to freight costs rather than discounting. "We forecast ANZ 2H gross margins of 64.8%, still below 66.0% from FY 2024," as the benefits of price increases may take time to show up in Nick Scali's results. Also, with consumer confidence still weak, Nick Scali is likely to tread carefully with price rises, Citi adds. It retains a buy call on Nick Scali's stock. (david.winning@wsj.com; @dwinningWSJ)
(END) Dow Jones Newswires
October 21, 2024 18:04 ET (22:04 GMT)
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