@mikebrisy I think there could be some temporary unexpected shipping costs. As Anthony said, they have shipping contracts which are not being honoured. They can’t ask customers to pay more once their lounge is ordered so Nick Scali might have to wear some additional shipping costs.

The Singapore shipping jam is also a worry. It could push out delivery times for lounges, and customers don’t like that. This happened during COVID. We were caught up in it with our order. Funny thing, when they delivered our lounge I asked the delivery driver if they were busy. He said they were run off their feet with deliveries. That’s when we started snapping up Nick Scali shares! Soon paid for the lounge! :)

@Rick good points.

Well, as I said yesterday, there's room in my portfolio for more $NCK. So if there is a bit of a miss at the FY driven by surprise supply chain costs, I'll not be too gutted. ;-)

(Of course, I don't think anyone ever really wants the SP of their holdings to go down. But there can be a silver lining.

For what it's worth I've decided to trim my NCK IRL right back. The multiple has run up a lot in the last few months. It's now up in the top quartile of where it gets to over the past 5 years.

On top of what are likely some softening sales (especially if we get another rate rise or two here which still seems probable), it's now likely they have some earnings compression from the shipping costs.

And we know Anthony expects the UK expansion to be a drag on EPS over the next 18 months. So I expect we will see a couple of halves of earnings falls and the market probably sells off a bit. I'm going to sit on the sideline and hopefully buy back in when the mood is much gloomier...

@Karmast - your point makes perfect sense to me (see below graph).

I did consider the P/E ranges, but when the price dipped recently taking the P/E down to below 13, I felt it wasn't too far north of the mid-cycle average. (My overlay grid is done by eye-ball only - I ignore the very high PE peaks during the COVID-bounce, as an aberration.)

I know some investors will only buy when a stock is in the bottom quartile - and this makes sense I guess if you are talking about a pure cyclical. However, I see $NCK as a cyclical-growth play, and so I am more than happy to add when it is in the vicinity of mid-cycle. I use the P/E only as one consideration and not a hard filter.

I would like to hold a bigger position in $NCK, but am keeping powder dry for the situations you've described. I am a relative newcomer to the stock, having initiated my RL position only in Feb-2023. At 3.6% of my RL-ASX portfolio, I'd happily add another 50% over time, and I agree that 1) retail macro and 2) getting going in the UK may well lead to some "opportunities for disappointment", hence buying opportunities, over the next 6-12 months.

However, from a valuation perspective and long-term view, I was happy to add some.

I also liked @UlladullaDave's post on the retail cycle and mean reversion etc.

Where I differ from you, is that I'd need to see $NCK's P/E fly up quite a bit more before I'd consider trading it. (My default preference is just to hold for a long time, unless the stock gets beyond my valuation high case.) Still, that's what makes a market. One investor's sell is another's buy. (Thanks for selling me your shares!:-) )