Adairs has completed a solid recovery from the weak performance in 2016-17 by lifting net profit 45% to $30.6 million and boosting final and total dividends for the year to June 30.
The Sydney-based manchester, bedding and hobby group said sales rose 18.8% to $314 million, while on a same store basis (the best measure for retailing sales performance) sales were up 14.3% against 2016-17’s fall of 1.4%
Helping lift sales was a strong performance on line with Adairs saying web-based sales were up 75.1% to $41.5 million.
A final dividend of 8 cent a share, fully franked will be paid, taking the total for 2017-18 to 13.5 cents a share, up nearly 69% from a year ago when earnings fell 23% after the company stuffed up a bed linen strategy.
Investors liked the shape of the figures and the forecast for 2018-19and sent the shares up more than 7% to $2.49 at one stage before they retreated in later trading and ended the session up 3.4% at $2.40.
Adairs forecast a 7% rise in earnings in that 2016-17 financial report and the outcome was much stronger.
The company said total stores at June 30 were 167 with 8 new stores, 5 upsized and 2 refurbished, and 1 closed during the year.
The company’s gross profit was up 20.9% to $189.6 million and earnings before interest and tax rose 46.9% to $45.3 million. Net debt was reduced by $15.4 million.
Looking to the current financial year the company sees another solid performance, although growth rates will be slower than in the year to June this year.
"Over the first seven weeks of FY19, Adairs generated like for like sales growth of 5.4% across its stores and online. The new season range has just landed and there will be better visibility of how it has resonated with customers at the end of the first quarter of FY19,’ the company said yesterday.
The Company said it is expecting between 171 and 173 new stores by next June, sales of between $345 million and $360 million, a gross margin between 59% and 61% (60.3% in 2017-18) (up around 10% to 15%); EBIT between $47.5 million and $51.5 million (up 5% to 10%) and capital investment between $8 million and $10 million.
In yesterday’s statement Adairs’ CEO Mark Ronan said: “The strong result in FY18 shows that our business is back on its growth trajectory, with sales up 18.8% to $314.8 million and net profit after tax up 45.4% to $30.6 million.
"Our focus on operational excellence has ensured we delivered what our customers wanted, a fashionable well co-ordinated product range via a superior retail and online shopping experience.
"The strong FY18 like for like sales of 14.3% was very pleasing. This growth came from increased transaction volume, with more customers choosing to shop at Adairs and our existing customers, including our growing Linen Lovers membership base, shopping more frequently.
"Our omni channel retail capability continues to be a key growth driver. Online sales grew 75% to $41.5 million and now account for 13% of our total sales. Our growing Linen Lovers loyalty program, with membership growing at 15%, now represents over 70% of our total sales,” he said.
