Adairs lifts annual profit 19pc, reaps benefits of online switch

Shares in retailer Adairs hit a record high after it announced a strong start to the new year following a 19pc rise in profit.

Adairs appears tgo be rebounding well from pandemic shutdowns.

Shares in Adairs shot up more than 17 per cent in early trade after the Manchester retailer touted strong sales growth for the first five weeks of the new financial year and unveiled a rise in full-year profit for 2020.

In an unaudited results statement, Adairs said net profit after tax jumped 19 per cent to $35.3 million for the full-year through to June. Earnings before interest and tax jumped 39.7 per cent to $60.7m.

Adairs closed stores, stood down staff and turned to online sales because of the COVID-19 pandemic but chief executive Mark Ronan said: “We have seen strong trading since reopening our stores and websites throughout May, which has continued up to today.

“Our results confirm the strength of our brands and the competitive advantage our omni-channel model provides in these volatile times.

“The acceleration in online penetration and growth rate brought about by COVID-19 restrictions has long term benefits for us as more of our customers shop across our brands.”

The company declared a final dividend of 11 cents per share fully franked, up from 8c a share a year ago. The company cancelled its interim dividend this year at the beginning of the COVID-19 outbreak to preserve cash.

By 10.40am (AEST), shares in Adairs had lifted 17.2 per cent to hit a record high of $3.21.

For the first five weeks of fiscal year 2021, group total sales had lifted 32.3 per cent, Adairs said in a statement.

The company said that COVID-19 had accelerated its online penetration and growth rate and that it was well placed to continue to benefit from a pivot to online shopping, though it did not provide a full-year guidance due to COVID-19 uncertainties.

Mr Ronan acknowledged the work of the Australian and New Zealand governments which introduced employment support packages and enabled Adairs to continue to pay its teams whilst they were stood down in response to the coronavirus restrictions.

“During the period Adairs stores were closed most of our team were asked to stand down, with a smaller group tasked with managing Adairs as an online only retailer,” Mr Ronan said.

“They did this with unwavering professionalism and understanding, ensuring that we successfully navigated the store closure period and emerged well placed to manage and capitalise on the new and evolving retail environment.

“Shareholders should be comforted and pleased that at Adairs and Mocka they have teams who are committed to their customers and delivering ongoing profitable growth.”