Another record year for Adairs as Australian homebodies get comfy in lockdown

Another record year for Adairs as Australian homebodies get comfy in lockdown

With COVID-19 putting the home in focus for discretionary spenders, Adairs (ASX: ADH) has posted yet another record year of sales and profitability today.

But the linen and homeware retailer’s board wants to stress that while the pandemic has been a boon, success should be attributed to its omni-channel model, its unique product and “amazing team” - all of which helped it make the most of the changing winds.

Adairs’ group sales were up 28.5 per cent to $499.8 million, and statutory net profit after tax rose by 80.7 per cent to $63.7 million.

The company’s earnings for the year nearly doubled to $109.1 million, up from $55.3 million last year.

The results were achieved despite a third of all trading days in the year being impacted in some way by COVID-19 related store closures.

In particular, Greater Melbourne stores (representing 25 per cent of the company’s national network) were required to close for 99 days of FY21, or 27 per cent of total trading days.

“Our FY21 results confirm the strength of our brands and the competitive advantage of our omni-channel model provides in this ever-changing environment,” Adairs managing director and CEO Mark Ronan said.

“The continued growth in our online channel has long term benefits for us as more of our customers shop across both channels.

“I am particularly proud of how our team has responded to the challenges caused by the pandemic which continues to have a significant impact on our business. They continue to successfully adapt to enable us to capitalise on the current retail rating environment.”

Focusing on the Adairs brand in particular, which finished FY21 with sales up 22.1 per cent over the prior year, the company says customers moved from online to bricks & mortar and back again “depending on the prevailing circumstances”.

Meanwhile, the company’s furniture business Mocka achieved sales of $60.2 million (up 30.9 per cent), noting that Adairs’ ownership of the company was for 30 of the 52 weeks in FY20.

That subsidiary today got a new CEO, with Vanessa Brennan appointed into the top job at Mocka having previously been chief brand and strategy officer at jeweller Michael Hill (ASX: MHJ).

“Vanessa is well placed to lead the Mocka business as it continues to pursue its strategy of building market share by delivering differentiated stylish and functional product, convenience and value for money to customers,” Ronan said.

“Vanessa is a timely addition to our team as we continue to scale the Mocka business and pursue its full potential.”

The company exited FY21 with $26 million of net cash and no bank debt, compared to a net debt position of $1 million last year.

Given the underlying NPAT in FY21, the board has declared a final fully franked dividend of 10 cents per share, bringing the total dividend payout for the year to 23 cents per share.

Shares in Adairs are up 2.17 per cent to $3.77 per share at 2.07pm AEST.

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