- Adairs (ADH) has capped off a remarkable 2020 financial year, with a 12.9 per cent increase in sales and a 19 per cent increase in profits
- The home retailers’ underlying earnings also increased by 39.7 per cent to 60.7 million at the end of FY20
- Online sales helped drive the growth, with around 35 per cent of all sales through Adairs now occurring online
- However, COVID-19 did affect the retailers’ stock levels, which were down year-on-year
- But, the company ended the year cash flow positive and will pay shareholders a fully franked dividend of 11 cents per share
- Shares in Adairs are trading up 10.4 per cent at $3.03 per share
Home retailer Adairs (ADH) has posted strong annual results, ending the 2020 financial year with an increase in sales and profits.
Online sales up during COVID-19
Online sales led the charge, more than tripling during the coronavirus related shutdowns which saw Adairs close all of its stores across Australia and New Zealand for at least six weeks.
The retailer recorded a 228 per cent increase in online sales in April, while its Mocka brand — which it bought in December 2019 — recorded increases of 139 per cent during the same period.
Online sales now make up around 35 per cent of all sales for the company at the end of FY20.
All up, Adairs and Mocka racked up $388.9 million worth of sales last financial year, a 12.9 per cent increase on the previous year.
However, while COVID-19 helped increase online sales, it did diminish Adair’s inventory by 18 per cent on a year-on-year basis, as supply chain issues emerged.
The company said the issues have now been resolved.
Net profit also increases
Along with an increase in sales, Adairs’ profit also rose during FY20. Net profit after tax (NPAT) was up 19 per cent year-on-year to sit at $35.3 million.
Meanwhile, earnings before interest, taxes, depreciation and amortisation (EBITDA) totalled $59 million at the end of FY20, up a strong 35.6 per cent compared to FY19.
The gross margin from sales jumped to 61.4 per cent, up from 59.2 per cent in FY19, as the company reduced the depth of product markdowns and offered fewer promotions.
These positive results helped the retailer end FY20 cash flow positive, with $7.2 million on the balance sheet.
Shareholders will now benefit from the strong annual results, with their fully franked dividend to be priced at 11 cents per share, representing 72 per cent of the second half NPAT.
It’s good news for investors, who initially had their interim FY20 dividend cancelled due to COVID-19 and a wider need to preserve cash.
Future growth?
Looking ahead, the board of Adairs said it was hesitant to provide guidance for FY21 due to the ongoing coronavirus pandemic.
But, the company did reveal it expects to open another three or five new stores across Australia and New Zealand and upsize an additional three or five.
It also revealed its total sales across the group were up 32.3 per cent in the first few weeks of FY21, including both online and in-store purchases.
Following today’s FY20 update, shares in Adairs are trading up 10.4 per cent at $3.03 at 3.30 pm AEST.