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- Homewares retailer Adairs (ADH) achieves record sales of $564.5 million in FY22, marking a 12.9 per cent year-on-year increase
- The company attributes the result to the Focus on Furniture acquisition in December and the strength of its omni-channel model
- Despite these, COVID-related operational disruptions impacted the group’s cost base and meant the growth didn’t translate into increased profits
- Adairs remains confident, however, that with a full year contribution from Focus on Furniture, and ongoing improvement at Mocka, FY23 will see a growth in sales and EBIT
- Company shares are down 10.8 per cent to trade at $2.28 at 2:01 pm AEST
Despite suffering store closures in the first half, Adairs (ADH) has achieved a record sales result for the 2022 financial year.
The homewares retailer reported $564.5 million in group sales, representing a 12.9 per cent increase on the prior corresponding period (pcp).
Adairs said the Focus on Furniture acquisition in December 2021 and the strength of its omni-channel model helped it to deliver a strong sales result despite operational challenges.
Focus on Furniture contributed $81.7 million in sales in just seven months of ownership as well as underlying earnings before interest and tax (EBIT) of $17.2 million.
The company said the $80 million acquisition was a key step in increasing its exposure to the bulky furniture category and is a “quality addition” to its portfolio.
The acquisition is expected to deliver double-digit earnings per share (EPS) accretion from FY23.
As for the Mocka business, the company reportedly had a “disappointing year” with sales down in the second half due to supply chain disruptions and product issues. Mocka also faced higher costs due to growth investment and higher warehouse costs to support increased inventory holdings.
Both issues have reportedly been addressed and customer confidence is said to be increasing.
Regardless, Managing Director and CEO Mark Ronan said FY22 produced a record level of sales.
“This comes despite widespread store closures due to COVID and reflects the strength of our omni-channel model, with the group approaching $200 million in online sales, as well as strong support from our loyal customer base and another strong year in terms of product offering,” Mr Ronan said.
“Significant operational disruptions related to COVID-19, particularly within our supply chain, impacted the group’s cost base and meant that this growth did not translate into an increase in profits.”
Government-mandated store closures combined with an 8.3 per cent increase in cost of doing business saw Adairs report an underlying EBIT of $55.5 million for its own brand and an underlying group EBIT of $76.4 million when including Focus on Furniture and Mocka. This group result represents a 30 per cent decline on the pcp.
By the end of the financial year, the company had net debt of $93.2 million and $26.1 million in cash.
The board has declared a final fully franked dividend of 10 cents per share which takes the total dividend payout for the year to 18 cents per share. The dividends will be paid on September 22.
With FY23 being the first full year of owning Focus on Furniture, and ongoing improvement at Mocka, the company expects to continue to improve both sales and EBIT in the new financial year.
As such, Adairs has provided its FY23 guidance which is between $625 and $665 million for group sales and an EBIT of between $75 and $85 million.
Company shares were down 10.8 per cent to trade at $2.28 at 2:01 pm AEST.
