Adairs' (ASX:ADH) sales hit by store closures & higher costs

Company News

by Lauren Evans

Mandated store closures from Covid-19 have led Adair’s (ASX:ADH) group sales to be impacted in the first half of the financial year.

The furniture company added that gross margins have been impacted by supply chain costs, higher delivery costs to online customers and additional promotional activity. Gross margins will be below the first half of FY21 as expected, but remain ahead of the first half of FY20.

Adairs reported group sales of $242 million for the half, compared to $243 million in the prior year, and $180.3 million for the same period in FY20. The first half FY22 group sales include a $12.5 million contribution from Focus on Furniture for its 26 days of ownership.

Group like-for-like sales were up 2.7 per cent, adjusting for store closures and excluding Focus. Group online sales excluding Focus were up 8.2 per cent to $97.6 million.

The group’s underlying earnings before interest and taxes is expected to be in the range of $32 million to $33 million, compared to $60.2 million in the first half of FY21, and $22.6 million for the first half of FY20.

Adairs warned that the cost of doing business will be elevated in the first half of FY22 because of lower levels of rent rebates, leading to higher occupancy costs. Higher salary and wage costs, warehouse costs and ongoing investments will also lift overall costs.

Shares in Adairs (ASX:ADH) are trading 17.6 per cent lower at $3.14. 

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