Adairs Ltd. · ASX:ADH
Adairs — H1 FY2024 Earnings Presentation
19 slides from Adairs's earnings presentation, Feb 26, 2024
Slide 1: Adairs Limited 1H FY24 Results Presentation
Adairs Limited 1H FY24 Results Presentation 26 February 2024 MARK RONAN ASHLEY GARDNER MANAGING DIRECTOR & CHIEF FINANCIAL OFFICER CHIEF EXECUTIVE OFFICER
Slide 2: Group result – 1H FY24
Group result – 1H FY24 1 Sales declined in a more challenging trading environment, with management prioritising gross margin (which improved for all brands), cost management (which fully offset inflationary pressures), and cash flow from operations (which delivered a material reduction in net debt).
Slide 3: Key management priorities
Key management priorities 2 Management’s focus is on near-term actionable priorities given the current macro environment NDC transition Linen Lovers Store strategy Consolidating gains ► Continue to improve service and ► Building upon successful ► Expect to open up to 3 new stores • Continue improvem
Slide 4: Adairs brand – 1H FY24
Adairs brand – 1H FY24 3 A challenging half however gross margins improved, costs are lower, and the NDC turnaround is on track with material service and cost improvements Adairs ► Adairs’ sales finished down -9.3%1 on 1H FY23 driven by lower traffic and stock availability/range issues Underlying Un
Slide 5: Adairs – NDC update
Adairs – NDC update 4 The improvement in service levels (customers and stores) and reduction in costs under Adairs management are tracking to plan. Background ► Adairs took control of its National Distribution Centre in September 2023 to address operational and cost issues under the DHL operated 3PL
Slide 6: Focus on Furniture (‘Focus’) – 1H FY24
Focus on Furniture (‘Focus’) – 1H FY24 5 A solid first half given the weaker trading environment and the business cycling a strong prior year. ► Focus sales of $66.2 million, down -15.8% on 1H FY23. Written orders were down -6.9%. Focus on Furniture Underlying Underlying Underlying – cycling a recor
Slide 7: Mocka – 1H FY24
Mocka – 1H FY24 6 Improved gross margin accompanied by disciplined cost management, saw a solid recovery in EBIT despite minimal growth in traffic and sales Mocka Underlying Underlying Underlying Change ($ million) HY24 HY24 HY23 ► Mocka sales grew by +0.8% to $25.3 million (26 weeks) v HY23 (%) (27
Slide 8: Balance sheet and cashflow
Balance sheet and cashflow 7 ($ million) Dec 21 Jun 22 Dec 22 Jun 23 Dec 23 Inventories ► Total Group inventories reduced by -$4.3m over the half (-$22.8m YoY). Inventories 100.2 99.1 106.4 87.8 83.5 ► In-country inventories are down 26% YoY due to planned reductions and delays Trade and other payab
Slide 9: Trading update and outlook
Trading update and outlook 8 Unaudited FY24 v FY23 Sales (weeks 27 to 34) Group -9.6% Adairs -9.5% Focus -14.1% Mocka +4.0% ► The Group continues to see customer traffic significantly lower than the same period last year and sales for the first eight weeks of 2H FY24 remain challenging. ► Consumers
Slide 10: Questions?
QUESTIONS?
Slide 11: Appendices
APPENDICES 1. Who are we 2. Positioning of our Group 3. Store footprint - Adairs 4. Store footprint – Focus 5. Group profit and loss 6. Profit and loss reconciliation 7. Group cashflow 8. Glossary
Slide 12: Appendix 1 – Who we are
Appendix 1 – Who we are 11 Adairs Limited (ASX: ADH) is Australasia’s largest omni channel retailer of homewares and home furnishing products ► Own three growing and highly profitable businesses ► Vertical retail model ► Leading specialty retailer of home furnishings with a large and – in-house desi
Slide 13: Adairs store footprint
AppendixA3recap: Our store – Adairs strategy footprint 12 Store Activity (1H FY24) Total Stores: 170 Number of stores Start New Closed End Upsized Refurb Victoria 54 1 3 52 2 2 New South Wales 44 44 Queensland 30 30 Western Australia 23 23 1 South Australia 7 1 8 ACT 3 3 Tasmania 2 2 Northern Territ
Slide 14: Appendix 4 – Focus store network
Appendix 4 – Focus store network 13 Network of 24 stores, predominantly in Victoria. Typical store size is 1,500-2,000 square metres. State / Territory Stores GLA m2 Victoria (Greater Melbourne) 11 18,177 Victoria (Regional) 4 8,079 NSW (Greater Sydney) 2 4,985 NSW (Regional) 3 5,376 ACT (Canberra)
Slide 15: Appendix 5 – Underlying Group profit and loss
Appendix 5 – Underlying Group profit and loss 14 Adairs Focus Mocka Group Underlying Underlying Underlying Underlying Underlying Underlying Change ($ million) HY24 HY24 HY24 HY24 HY24 HY23 v HY23 (%) (27wks) (27wks) (27wks) (27wks) (26wks) (26wks) Store sales 156.2 61.4 - 217.6 208.5 235.6 -(11.5%)
Slide 16: Profit and loss reconciliation
AppendixA6recap: Our – Profit strategy and loss reconciliation 15 1H FY24 reconciliation 1H FY23 reconciliation NDC NDC ($ million) Underlying AASB 16 transition Statutory Underlying AASB 16 transition Statutory FY24 impact costs FY24 FY23 impact costs FY23 Sales 302.4 - - 302.4 324.2 - - 324.2 Gros
Slide 17: Appendix 7 – Group cashflow
Appendix 7 – Group cashflow 16 ($ million) Underlying Underlying Underlying to statutory reconciliation 1H FY24 1H FY23 1H FY24 reconciliation Underlying EBITDA 36.2 39.7 ($ million) Underlying AASB 16 Statutory Underlying 1H FY24 impact 1H FY24 1H FY23 Significant items (cash impact) (1.6) (0.2) Op
Slide 18: Appendix 8 – Glossary
AppendixA8recap: Our strategy – Glossary 17 Term Meaning Term Meaning ASP Average selling price IPS Items per sale ATV Average transaction value LFL Like for like CAC Customer acquisition cost LTM Last twelve months Cost of doing business (refers to all expenses incurred by the company CODB NPAT Net
Slide 19: Important Notice and Disclaimer
Important Notice and Disclaimer The material in this presentation is general background information about Adairs Limited (ABN 50 147 375 451) (Adairs) and its activities current as at the date of the presentation. It is information given in summary form and does not purport to be complete. It should