Benefiting from the surge in purchases in homewares by Australians redecorating their homes during lockdown, Adairs saw group sales grow 12.9 per cent to $388.9 million during FY20 leading to a net profit of $35.2 million – up almost 16 per cent.
Online sales also grew 111 per cent to $124.2 million, and made up 32 per cent of total sales compared to 17 per cent a year ago.
“Despite the challenges and uncertainties placed on our industry and the broader economy by the Covid-19 pandemic I am pleased to report that FY20 was a good year for Adairs,” chief executive Mark Ronan said.
“Our CODB [up 1.8 per cent] benefitted from the receipt of Government subsidies, including JobKeeper, which have contributed materially to maintaining the employment of many of our team members.
“The government subsidies were helpful to our results, [though] it was clear that the company was performing well leading into this difficult period and would have delivered strong results had Adairs not been eligible for the subsidies.”
Adairs received $11.29 million in subsidies during the 52 weeks to 28 June, 2020.
And while the Australian dollar fell slightly during the pandemic, the business’ underlying gross margin increase of 226 basis points more than made up the difference.
This was attributed to a coordinated program of sourcing and retail pricing initiatives, combined with a focus on reduced depth and length of promotional activities.
However, Adairs is unwilling to commit to financial guidance for the coming year despite the fact it expects the increased focus on home renovation to persist while the pandemic remains due to the uncertainty in the market.
“We remain cautious about the next 12 months in light of the ongoing uncertain impact of Covid-19 on our industry in relation to severity and duration,” Ronan said.
“FY20 showed that our business environment can change rapidly, however it also showed that the Adairs and Mocha teams can move quickly as circumstances require and that our omnichannel model gives us a competitive advantage in all markets.”