Furniture retailer Nick Scali has significantly cut its fiscal first-half profit forecast after unexpectedly higher freight cost impacted its gross profit margin.

In a profit warning, Nick Scali MD Anthony Scali said the company estimates its Australia and New Zealand gross margin to be down 240 basis points or more compared to the year-ago period’s 66 per cent.

ANZ profit guidance is between $30 million and $33 million and sales revenue is anticipated to range from $217 million to $222 million.

Despite the forecast, the company reconfirmed its plans to open two Nick Scali stores and three to five Plush stores, with most of the openings taking place in the second half.

In the UK, the company expects to incur losses of $3.3 million to $3.7 million, with $1.8 million to $2.2 million in one-off costs relating to staff restructuring and system integration.

Gross margin in the first half for the UK is expected to range from 42 to 44 per cent and improvement due to delivered sales of the new product range changes is not expected until the second half.