Adairs Ltd. · ASX:ADH
Adairs — H1 FY2022 Earnings Presentation
20 slides from Adairs's earnings presentation, Feb 21, 2022
Slide 1: Adairs Limited 1H FY22 Results Presentation
Adairs Limited 1H FY22 Results Presentation 21 February 2022 MARK RONAN ASHLEY GARDNER MANAGING DIRECTOR & CHIEF FINANCIAL OFFICER CHIEF EXECUTIVE OFFICER
Slide 2: 1H FY22 Summary
1H FY22 Summary 1 Strong progress made on strategic objectives … .. however COVID disruptions impacted financial performance Adairs store growth continues Store closures impacted sales but omni strategy enabled LFL sales up on PCP ► 2 new Homemakers opened, 4 stores upsized in the half ► Group sales
Slide 3: The impact of COVID disruptions
The impact of COVID disruptions 2 Managing the business1 through COVID-19 was the main contributor to lower 1H FY22 Sales and EBIT and should not be recurring in the medium term Sales bridge ($m) Underlying EBIT bridge ($m) Explanation: • Adairs COVID store closures: Management estimate of sales and
Slide 4: Group result 1H FY22
Group result1 – 1H FY22 3 Financial performance down on record FY21 but remains well ahead of FY20 Adairs Mocka Group (pre-COVID) levels Underlying Underlying Underlying Underlying Change Change v 1H FY21 v 1H FY20 ($ million) HY22 HY22 HY22 HY21 v HY21 (%) v HY20 (%) Store sales 131.7 - 131.7 152.8
Slide 5: Adairs 1H FY22
Adairs – 1H FY22 4 Financial performance in the half Adairs ► Adairs sales –9.4%% to $194.9m driven by COVID-related store closures which resulted in 48% of trading days lost in VIC and 50% lost in NSW (31% lost for Adairs overall). Underlying Underlying Change Change ($ million) – Total sales remai
Slide 6: Mocka 1H FY22
Mocka – 1H FY22 5 Financial performance in the half Mocka ► New leadership and strong sales achieved despite COVID-driven supply chain and distribution disruptions Underlying Underlying Change ($ million) ► Mocka sales +22.8% to $34.3m, with strong growth in both Australia and New Zealand. HY22 HY21
Slide 7: Focus on Furniture acquisition
Focus on Furniture acquisition 6 In November 2021 Adairs announced its acquisition of Focus on Furniture, a vertically integrated omni-channel furniture designer and retailer operating in Australia. The price paid represents an EV of $80m on a debt-free basis (2.4x FY21 EBIT). Strategic rationale Ac
Slide 8: Capital management and dividend
Capital management and dividend 7 Healthy balance sheet Dividend ► Strong in-country inventory position across all businesses will ensure high availability of ► A fully franked interim dividend of 8.0 cents per share has been declared product across in 2H FY22 and reduce the risk associated with ong
Slide 9: The strength of our business model
The strength of our business model 8 Our business model Our brands Our TAM Our business outcomes Vertically integrated Size of Australian furniture Superior customer and furnishings market experience Exclusive products and $13.3b channels that we own High customer loyalty Omni channel Lower customer
Slide 10: Growth by brand
Growth by brand 9 Historic growth Historic growth Historic growth CAGR CAGR CAGR 1 year 3 years 5 years 1 year 3 years 5 years 1 year 3 years 5 years Sales (9.4%) 5.8% 9.4% Sales 22.8% 25.3% 28.3% Sales (12.5%) 15.0% n/m Sales LFL (0.4%) 12.8% 13.7% Sales LFL 22.8% 25.3% 28.3% Sales LFL (2.8%) 28.6%
Slide 11: Trading update and outlook
Trading update and outlook 10 Trading update (first 7 weeks of 2H FY22) ► The first seven weeks of 2H FY22 have seen: Outlook ‒ continued online growth (both Adairs and Mocka) despite cycling record Store program growth rates in the prior corresponding period. ► Adairs expects to open 1-2 new stores
Slide 12: Questions?
QUESTIONS?
Slide 13: Appendices
APPENDICES 1. Who are we 2. Store footprint - Adairs 3. Store footprint - Focus 4. Like for like sales growth history 5. Profit and loss reconciliation 6. Glossary
Slide 14: Appendix 1 – Who we are
Appendix 1 – Who we are 13 Adairs Limited (ASX: ADH) is Australasia’s largest omni channel retailer of homewares and home furnishing products ► Own three growing and highly profitable businesses ► Vertical retail model ► Specialty retailer of home furnishings with a large and – in-house design growi
Slide 15: Appendix 2 – Adairs store footprint
AppendixA2recap: – Adairs Our store footprint strategy 14 Total Stores: 170 Store Activity (1H FY22) New stores (2) GLA (m2) Homemaker – Karrinyup (WA) 521 Homemaker – Burleigh (QLD) 683 Total GLA increase 1,204 Merged stores (1) GLA (m2) Previous Current Kids – Robina Kids with Homemaker (QLD) 314
Slide 16: Appendix 3 – Focus store network
Appendix 3 – Focus store network 15 Network of 23 stores, predominantly in Victoria. Typical store size is 1,500-2,000 square metres. State / Territory Stores GLA m2 Victoria (Greater Melbourne) 11 17,647 Victoria (Regional) 4 8,079 NSW (Greater Sydney) 1 3,365 NSW (Regional) 3 5,376 ACT (Canberra)
Slide 17: Appendix 4 – Like for like sales history
Appendix 4 – Like for like sales history 16 Adairs Historic LFL Sales Growth 30.9% 14.8% 7.3% 6.9% (0.4%) 1H FY18 1H FY19 1H FY20 1H FY21 1H FY22 Mocka Historic LFL Sales Growth 44.3% 35.5% 30.6% 22.8% 11.0% 1H FY18 1H FY19 1H FY20 1H FY21 1H FY22
Slide 18: Appendix 5 – Profit and loss reconciliation
AppendixA5recap: Our – Profit strategy and loss reconciliation 17 1H FY22 reconciliation 1H FY21 reconciliation ($ million) Focus post- Mocka Focus NDC Mocka NDC Underlying acq results AASB 16 transaction transaction transition Statutory Underlying AASB 16 JobKeeper transaction transition Statutory
Slide 19: Appendix 6 – Glossary
AppendixA6recap: Our strategy – Glossary 18 Term Meaning ASP Average selling price ATV Average transaction value CODB Cost of doing business DC Distribution centre EBIT Earnings before interest and tax EPS Earnings per share GLA Gross lettable area (floor space in square metres - excludes any offsit
Slide 20: Disclaimer
Strong Omni Channel Execution Disclaimer Some of the information contained in this presentation contains “forward-looking statements” which may not directly or exclusively relate to historical facts. These forward-looking statements reflect Adairs Limited current intentions, plans, expectations, ass