One interesting aspect of this result to me was the big jump in...

One interesting aspect of this result to me was the big jump in the payout ratio, to 69%.[previous DH payout ratios were 56% (DH16), 52% (DH15), 56% (DH14), and 62% (DH13)].

Madamswer, I think you may have used the Final Dividend of 20 cents FY2017 in your calculations of the payout ratio for 1H2018. The interim 2018 dividend is 16 cents, so with EPS of 29 cents, the payout ratio is down slightly to 55%. So all is fine in this regard, rest easy! I agree re debt, let's be conservative.

On the gross margin discussion, I think it actually fell from 2H2017, but improved on 1H2017. I guess it moves around from period to period, so taking a longer term perspective could be more telling. From 2013 to 2018 gross margin has risen from 61.0% to 62.6%, during which time the AUD has fluctuated from over US$1.00 to below $0.70. In this context the company has probably acquitted itself pretty well, continuing to source new desirable products while gaining margin. Some of this I think we can put down to expanding the product range, with casegoods reaping higher margins - so credit to management.

Worryingly, as other have pointed out, we keep hearing talk of further overseas expansion. NZ - yes ok, but despite the MD noting he knows the UK market well, I'm very wary of European expansion ( we just witnessed Bunnings traverse the well worn path of Australian businesses' catchcry "we will show you how to retail"). Are these thoughts a sign that NCK is running out of ideas to grow once the store footprint matures in ANZ? Sofas2Go and Chateau d'Ax didn't work out, so what's next? Perhaps the answer lies in these new Masters stores, extra floorspace to fill with some imagination? Let's hope.