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- Home furnishings retailer Adairs (ADH) has released results for the half year ending on December 29, 2019
- The company had record sales of nearly $179 million, an 8.9 per cent jump from the first half period of the 2019 financial year
- Arguably, the most significant step for the home retailer is the purchase of Mocka for just under $77 million
- Mocka is a New Zealand-based home and living products designer and distributor
- While Mocka could not yet impact this period, Adairs expects it to be financially lucrative in future results
- Even with this purchase, Adairs achieved gross profit of over $109 million, and net profit after tax (NPAT) was up 4.2 per cent to $15.7 million
- In terms of operations, Adairs struck an agreement with DHL to operate a new National Distribution Centre
- This will make shopping more convenient for customers and will be more cost-efficient for the company
- Adairs is up 7.92 per cent with shares trading for $2.59 each
Home furnishings retailer Adairs (ADH) has released results for the 26 weeks ending on December 29, 2019.
The company posted record sales of $178.9 million, up 8.9 per cent compared 1H FY19.
“The first half of FY20 was significant for Adairs with record levels of sales and profitability, the acquisition of Mocka and the finalisation of our domestic supply chain strategy,” CEO and Managing Director Mark Ronan said.
Arguably, the most significant step for the home goods retailer is the NZ$81 million (approx. A$76.4 million) acquisition of Mocka.
Mocka is a unique home and living products designer and retailer that distributes from Christchurch and Brisbane.
The company bought Mocka as an attractive asset to expand its offerings and portfolio.
In December alone, Mocka contributed $2.4 million to consolidated group sales. Adairs forecasts the acquisition will be financially lucrative. However, this will be revealed for certain in the end of financial year results.
“We continued to deliver above market sales growth with group like for like sales up 6.9% and online sales up 31.6% (excluding Mocka),” Mark added.
Even with the purchase of Mocka, Adairs still achieved gross profit of $109.3 million, and net profit after tax (NPAT) up 4.2 per cent to $15.7 million.
Adairs’ online strategies continued to deliver strong performance with online sales increasing by 31.6 per cent since 1H FY19. Online sales now account for 18 per cent of total sales.
Store like for like sales were up 2.4 per cent which, combined with store cost control, saw stores increase profits for the period.airs
The company credits the optimal sales to its digital strategy, integrated stock availability and the strong engagement from Adairs’ Linen Lovers members.
After taking a look at its supply chain, Adairs entered an agreement with DHL as its 3PL partner to operate a new National Distribution Centre (NDC).
The NDC is a key part of Adairs’ omni-channel (online) strategy for customers to be able to shop how, where and when they choose.
Currently, it has multiple DC operations. Integrating these into a single one will improve stick flow and availability, and improve service for stores and customers at peak trading periods.
The retailer expects this build will save it roughly $3 million a year from financial year 2022.
This facility is expected to be available early next year and operations will be fully transitioned by July 2021.
Adairs is up 7.92 per cent with shares trading for $2.59 each at market close.
