Linen seller Adairs will repay $6.1 million worth of JobKeeper subsidies claimed from the federal government in 2020 after confirming earlier guidance for a record half-year result for the company.
That saw the shares jump more than 5% at one stage to a record $4.33, even though the outperformance had been well guided by the company in a trading update in early December.
However the shares dipped in afternoon trading to end down more than 3% at $4.04.
The retailer told investors it felt it was appropriate to repay the help after reporting a 34.8% surge in sales for the six months to the end of December and a 233% surge in net profit to $43.9 million.
Online sales across the business, which includes recently acquired online retailer Mocka, rose 163% and now make up 37% of total sales – that’s more than three times the share online sales has of retail sales in this country according to the Australian Bureau of Statistics data.
In light of the strong sales and profit growth, the Adairs board declared a fully franked interim dividend of 13 cents a share. Last year’s interim dividend was cancelled due to COVID-19.
At the December, the company had cash of $22.1 million. This compares to net debt of $1 million at the end of June.
Besides the Adairs stores and Mocka business, the company’s Linen Lover loyalty program performed strongly.
Its membership numbers now exceed 900,000. Management says this is a big positive as members are highly engaged, visit more often, and spend more each visit than non-members. Linen Lover members now account for high 75% of Adairs sales.
Like JB HiFi on Monday Adairs wouldn’t give guidance for the rest of the june 30 year, but said had made a strong start with solid rises in sales for January.
Adairs has started the second half strongly. It advised that sales during the first seven weeks of the half are well ahead of the prior year.
Adairs’ Jnauary online sales were up 65.9%, Mocka up 48.6%, and like-for-like store sales were +12.4%.
“Positively, gross margins in both businesses remain elevated and in line with the first half,” the company noted.
And then there’s COVID – both a threat and a boon for companies like Adairs.
“COVID-19 continues to encourage strong spending in home improvement and home decoration, and we expect this behaviour to persist whilst COVID-19 uncertainty continues.
“While current trading remains strong, due to the ongoing uncertainty relating to COVID-19 the Board does not consider it appropriate to provide guidance for the FY21 full year at this time.”
