Aussies still largely stuck at home keep sprucing up their nests, delivering bedlinen giant Adairs a record full-year profit and clearing its debt.
Bedlinen retailer Adairs has notched up record full-year results, driven by the well-observed trend of home sprucing, despite being hit by Covid-related store closures for one-third of all trading days in 2020-21.
The company booked a near 81 per cent surge in statutory net profit to $63.7m on Friday, reported it had cleared its debt and declared a final dividend of 10 cents per share, taking the annual payout to shareholders to 23 cents per share.
As seen with other retailers, online sales soared, representing more than 37 per cent of purchases, and even in-store sales managed to rise.
“Customers comfortably moved from one channel to the other and back again depending on the prevailing circumstances,” Adairs said.
Margins improved, with lower stock levels across the industry and strong customer demand prompting the company to reduce “the depth and length” of promotions.
More shoppers became members of its loyalty program, even with the “paid membership feature”, which was “an excellent barometer of Adairs’ brand health and customer engagement”, the company said.
It opened, upsized and refurbished Adairs stores and plans more, while the Brisbane warehouse for its Mocka business was doubled in scale. A new DHL-operated national distribution centre for Adairs will be fully operational by the end of September.
That’s about three months later than planned but still “an excellent outcome” given pandemic-related delays in building materials deliveries from offshore suppliers and restrictions throughout construction.
The group has stocked up, saying that will help it endure shipping and production delays across the global supply chain, which is expected to continue for some time.
It’s also cashed up, with $26m in the bank, and says it will continue to assess potential acquisitions.
For the first seven weeks of 2021-22, however, total store sales were down 27 per cent compared to the same period last year, mainly due to yet more pandemic-related store closures, with the company saying it had lost 40 per cent of trading days.
“Adairs and Mocka continue to benefit from consumers’ increased focus on their homes as a sanctuary, and increasingly a place of work, entertainment and education,” Adairs said.
“While unfortunate, we expect mobility and both domestic and international travel restrictions to remain a feature of our market for the medium term, which bodes well for a sustained period of elevated demand in the home category.”
The company expects lower margins due to supplier cost increases and higher sea freight costs, but says that will be reduced by the stronger Australian dollar against the greenback – with three-quarters of its expected US dollar inventory purchases this financial year hedged at 75 Aussie cents.
It’s also going to keep making sure it doesn’t go too hard on discounts.
Originally published as Bedlinen giant Adairs rakes in cash as shoppers spend big on home comfort, decor
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