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Adairs reaches record profit growth

Home-furnishing retailer Adairs Limited has reached record sales, profit and online growth for the FY18 period.

Sales rose 18.8 per cent to $314.8 million, compared to $265 million, while net profit after tax rose 45.4 per cent to $30.6 million.

“Our focus on operational excellence has ensured we delivered what our customers wanted, a fashionable well coordinated product range via a superior retail and online shopping experience,” Adairs’ managing director and chief executive Mark Ronan said.

“This growth came from increased transactional volume, with more customers choosing to shop at Adairs and our existing customers, including our growing Linen Lovers membership base, shopping more frequently.”

Membership in the company’s Linen Lovers loyalty program grew at a rate of 15 per cent, and now represents over 70 per cent of total sales.

Adairs’ online sales delivered 75.1 per cent like-for-like sales growth in FY18, reaching $41.5 million and making up 13 per cent of total sales, largely due to an improved conversion rate of 24 per cent, maintained transactional value and 38 per cent increase in traffic to the company’s website.

The company’s New Zealand stores, however, delivered a result that was lower than expected, with a supply issue resulting in stores being overstocked.

Efforts to change third-party logistics provider to improve supply chain, reworking price points and building brand awareness are already underway, and it is expected the New Zealand business will break even in the second half of FY19.

“We expect to generate a 5 – 8 per cent like for like sales growth underpinned by growth in both our store and online channels [in FY19],” Ronan said.

“In addition, we expect to add seven to ten new stores and upsize three to give stores over this financial year.”

Adairs is forecasting sales between $345 to $360 million, with a gross margin between 59 and 61 per cent, and an EBIT of $47.5 to $51.5 million in FY19.

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