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Adairs’ CEO Outlines Future Plans

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By Published On: May 9, 20180 Comments

At the company’s recent Investor Day, Adairs’ CEO, Mark Ronan talked sales, omnichannel shopping, product investments and customer loyalty and engagement.

Adairs’ goal moving forward is to take control of a larger portion of the $4.5 billion homewares and manchester market, taking shares from its main competitors like Myer, Sheridan and Bed Bath N’ Table. The company believes it can achieve this by expanding its product range, focusing on larger, more inspiring shop fronts in homemaker centres, and further developing its online business and loyalty program.

Ronan confirmed the retailer’s upgraded earnings guidance, which increased by seven percent last month from $40 to $44 million to $44 to $46.5 million. He believes the extra revenue will come from the new store openings that are in the works, which Ronan hopes will better showcase the brand’s exclusive products in a curated environment.

This plan includes opening a further seven to 10 stores per year over the next three years and expanding/renovating approximately 15 of its existing, high-performing stores.

The online business is also expected to grow over the next few years, with the company projecting its online revenue will make up 15 percent of total sales by 2019, an increase of two percent from 2017. Ronan also expects Adairs’ digital footprint to increase customer engagement.

“Given the size of online and its strong contribution margin this is a material contributor to our underlying profit,” he told investors.

According to Ronan, customers who shop through both Adairs online and in-store spend twice as much as those who only shop in-store and 3.3 times as much as those who only shop online.

A Key Focus on Loyalty

Adairs’ Linen Lovers loyalty program is a big area of focus for the homewares and manchester retailer moving forward, as the program is reportedly growing at a rate of around 15 to 20 percent per year, with 70 percent of the company’s overall sales coming from the program’s estimated 650,000 members.

Linen Lovers members also spend 1.5 to times more than consumers who aren’t members, with repeat business being higher among members than non-members as well.

“People don’t buy from Adairs every week, we want to make sure next time they shop the category they (shop at) Adairs,” Ronan told the Australian Financial Review.

Adairs had a tough year in 2017, with its EBIT dropping 21 percent as consumer habits started shifting away from exclusive bedding retailers and more towards discount department stores, such as Kmart.

However, Ronan assured the company’s investors that the brand has identified what went wrong and is working to ensure stronger results moving forward.

He expects the brand’s refined focus on loyalty and exclusive product ranges to help raise annual sales by at least 17 percent and recover its gross margins to 60 to 61 percent.

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