Adairs Ltd. · ASX:ADH
Adairs — H1 FY2021 Earnings Presentation
21 slides from Adairs's earnings presentation, Feb 16, 2021
Slide 1: Adairs 1H FY21 Results Presentation
Adairs 1H FY21 Results Presentation 16 February 2021 MARK RONAN CHIEF EXECUTIVE OFFICER ASHLEY GARDNER CHIEF FINANCIAL OFFICER
Slide 2: 1H FY21 highlights
A recap: Our strategy 1H FY21 highlights 1 Record sales across all channels ► Group sales +34.8% to $243.0m with LFL sales +32.4% ► Group online sales +163.2% to $90.2m (37% of Group Sales) – Adairs online sales +95.2% to $62.2m – Mocka +44.4%1 to $28.0m ► Adairs store sales +4.6% with LFL store sal
Slide 3: Profit and loss
Profit and loss 2 Record sales and profit Adairs Mocka Group Underlying Underlying ► Group sales +34.8% despite 43 Greater Melbourne stores being Underlying Underlying Change Underlying Underlying Change ($ million) HY21 HY20 closed for almost half the period HY21 HY20 (%) HY21 HY20 (%) (26 weeks) (
Slide 4: Sales growth across all channels
Sales growth across all channels 3 Group sales ($ million) Sales growth breakdown 95.2% $250.0 $243.0 70% Adairs Stores ► Online sales growth helped Total +4.6% / LFL +14.4% $28.0 offset lost sales during the 44.4% 60% Greater Melbourne store 34.8% closure period 19.7% 17.1% $200.0 Adairs Stores - V
Slide 5: Contribution margins have improved across all channels
Contribution margins have improved across all channels 4 Gross margin1 Underlying gross margin rose 545bps to 66.1% 67.8% ► Margin growth for both businesses achieved through continued strong product execution; continuation of 62.8% price optimisation; reduced depth of discount; and 29 fewer full pr
Slide 6: Costs of doing business (CODB)
Costs of doing business (CODB) 5 CODB as % sales Selling 1 (stores/online) CODB % (excludes JobKeeper wage subsidy benefit) Selling CODB has been carefully managed throughout the period with operating leverage achieved in both Stores and Online 43.7% ► Store costs were managed in line with planned s
Slide 7: Capital management
Capital management 6 Strong balance sheet Dividend ► Inventory is clean and stock turns continue to improve ► A fully franked interim dividend of 13.0 cents per share has been declared ► Adairs inventory up $11.9m to $46.9m (+34.0%) – Record Date: Wednesday, 10 March 2021 – c.22% of this stock is in
Slide 8: Beyond FY21 – The drivers
Beyond FY21 – The drivers 7 1 Proven and resilient business model 2 Digital transformation and omni-channel leadership Strong brands (that we own and control) Our multi-channel offer gives us a larger TAM, significant synergy across ► Lower cost of customer acquisition and retention channels, and de
Slide 9: Beyond FY21 – Mocka growth
Beyond FY21 – The drivers 8 3 Mocka growth ► Australian brand awareness is growing rapidly with AU website visits +56% ► Expansion of Australian warehouse facilities recently completed to support growth ► Low market share in a very large category ► Product category expansion opportunities ► Capitali
Slide 10: Beyond FY21 – Profitable store formats
Beyond FY21 – The drivers 9 4 Profitable store formats ► All Stores are profitable with relatively short lease terms ► Larger stores are more profitable and significant upsizing opportunities remain within the current portfolio. Upsizing benefits: – showcase more products / categories – average incr
Slide 11: Beyond FY21 – Omni Supply Chain
Beyond FY21 – The drivers 10 5 Omni Supply Chain The new supply chain capability provided by the NDC will: ► Deliver a local supply chain solution that supports our strategy to enable Construction of our DHL-operated National Distribution Centre (NDC) in Melbourne is customers to shop how, when and
Slide 12: Trading update and outlook
Trading update and outlook 11 Trading update Outlook For the first seven weeks of 2H FY21, sales have remained well ahead of the prior year period: Store program ► Adairs expects to open 1-2 net new stores and upsize 3-4 existing stores across Australia and New ► Adairs online sales were +65.9% Zeal
Slide 13: Questions?
QUESTIONS?
Slide 14: Appendices
APPENDICES 1. Who are we 2. Store footprint 3. Adairs sales LFL history 4. Profit and loss reconciliation 5. Cash flow reconciliation 6. Glossary
Slide 15: Appendix 1 – Who we are
Appendix 1 – Who we are 14 Adairs Limited (ASX: ADH) is Australasia’s largest omni channel retailer of homewares and home furnishing products ► Own two fast growing and highly profitable businesses ► Vertical retail model – in-house design ► Specialty retailer of home furnishings with a large – excl
Slide 16: Appendix 2 – Store footprint
AppendixA2recap: – StoreOur strategy footprint 15 Store Activity (1H FY21) Total Stores: 168 New Stores (3) GLA (m2) Homemaker – Belmont (WA) 752 1 Homemaker – Warrigul (VIC) 840 Homemaker – Botany (NZ) 713 Total GLA addition 2,305 20 Closed Stores (2) GLA (m2) 8 Regular - Burnside (SA) 73 2 Kids -
Slide 17: Appendix 3 – Adairs sales LFL history
Appendix 3 – Adairs sales LFL history 16 Adairs LFL Sales Growth Last 5 Years (5 Year Average of +11.7%) 30.9% 26.4% 15.4% 14.8% 13.8% 8.7% 7.3% 7.1% 6.9% 1.0% -4.0% 1H FY16 2H FY16 1H FY17 2H FY17 1H FY18 2H FY18 1H FY19 2H FY19 1H FY20 2H FY20 1H FY21 Note: The above LFL sales results do not inclu
Slide 18: Appendix 4 – Profit and loss reconciliation
AppendixA4recap: Our – Profit strategy and loss reconciliation 17 1H FY21 reconciliation 1H FY20 reconciliation Mocka NDC Mocka Underlying AASB 16 JobKeeper transaction transition Statutory Underlying AASB 16 transaction Statutory ($ million) 1H FY21 impact benefit costs costs 1H FY21 1H FY20 impact
Slide 19: Appendix 5 – Cash flow reconciliation
Appendix 5 – Cash flow reconciliation 18 1H FY21 reconciliation Underlying AASB 16 Statutory Underlying ($ million) 1H FY21 impact 1H FY21 1H FY20 Opening cash 23.9 - 23.9 16.7 Operating cash flow 46.5 16.5 63.0 24.3 Investment cash flow (3.6) - (3.6) (3.8) Financing cash flow (44.6) (16.5) (61.1) (
Slide 20: Appendix 6 – Glossary
AppendixA6recap: Our strategy – Glossary 19 Term Meaning ASP Average Selling Price ATV Average Transaction Value CODB Cost of Doing Business DC Distribution Centre GLA Gross Lettable Area (in square metres - excludes any offsite storage a store may have) IPS Items Per Sale LTM Last Twelve Months NDC
Slide 21: 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