$24.3 Million and Growing: Adairs’ Rise to Digital Acclaim

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By Published On: February 25, 20190 Comments

The homewares and bedding retailer has reported strong online growth for the first half of FY19, following on from its digital success in FY18.

Announcing its results for the 26 weeks ending December 30, 2018, Adairs said it experienced another period of “substantial” online growth.

The retailer reported total sales of $164.4 million, an increase of 10.6 percent. Online sales for the half contributed to 15 percent of Adairs’ total sales, jumping by a whopping 42 percent year-over-year to $24.3 million. This comes after Adairs grew its online sales by 75 percent in full year 2018, equating to $42 million in revenue.

Gross profit for 1HY19 was up 11.3 percent to $100 million, while the company’s EBIT came in 7.2 percent higher than the same period in 2018 at $21.9 million. Sales in New Zealand were also profitable over the half, with the business stating revenue was ahead of its previous guidance. Adairs’ strong performance means its interim FY19 dividend is up 18 percent to 6.5 cps fully franked.

Crediting the company’s results to the entire Adairs’ team, the company’s Managing Director and CEO, Mark Ronan said he is pleased to see Adairs’ strong FY18 results rolling into 2019.

“The solid first half result follows a strong FY18 result. We are confident that our strategic priorities will continue to deliver profitable growth. The result highlights the potential for further growth in both sales and profitability,” he said.

Adairs’ online sales were the highlight of its 1HFY19 results presentation.

Noting the company’s online performance, Ronan attributed an increase in net profits to the strength of the business’s digital platforms.

“Another terrific online result combines with further progress in our category expansion strategy delivered a 9.1 percent increase in our net profit after tax to $14.9 million,” Ronan explained.

“Adairs growth over the first half, despite a weaker housing market, shows that our focus on delivering a great product at a good price, combined with our relatively low average transaction value, positions the business well to navigate a continually changing market. Our trading results suggest that the business continues to take market share, which is underpinned by category expansion and superior omnichannel retail execution. Adairs’ results also indicate that our customers continue to decorate and update their homes despite the deterioration in house prices and tightening credit availability.”

According to Ronan, Adairs’ cross-channel shopping experience is continuing to drive sales across its in-store and online network. “This growth continues to be driven by our ongoing work in optimising SEM and SEO, enhancing social media presence and growing our linen lovers loyalty program,” he said. “The ability to attract new customers to the Adairs’ website and provide them with an engaging experience is driving online transaction volumes with more customers choosing to shop at Adairs,” he continued.

In New Zealand, Ronan reported a 30 percent YOY increase in sales, attributing the country’s boost in sales to the decision to update its supply chain and rework the price point of its ‘basics offer’ to “better appeal” to first time NZ customers.

Looking to the second half and FY2019, Adairs expects sales to reach between $345 to $360 million, with gross margins predicted to fall between 59 and 61 percent. In its profit guidance, the company also said its EBIT will reach between $46 and $50 million.

“We are pleased with our start to the second half. We expect to generate high single-digit like-for-like sales growth, underpinned by growth across all channels,” Ronan said. “The moderation of our EBIT guidance range relates primarily to the expected impact of the depreciating AUD and a potentially more challenging consumer environment.

“Our underlying strategies are delivering solid results, and this, combined with our goal of excellence in retail execution put us in a position to continue to deliver profitable growth,” Ronan concluded.

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