Supply chain disruptions impact Adairs’ profit


Ongoing Covid-related issues, government-mandated store closures in the first half and freight delays have eaten into the profit of bedding and homewares retailer Adairs.

The company, which owns and operates Adairs, Focus on Furniture and Mocka brands, says group sales rose 12.9 per cent to $564.5 million in the year to June 26, while tax-paid profit fell 29.6 per cent to $44.9 million.

Online sales registered $195.4 million and contributed 35 per cent of all sales. Like-for-like sales, excluding its Focus brand, fell by 2 per cent.

Adairs’ cost of doing business was higher than the previous year at 8.3 per cent, largely due to one-off Covid-related warehousing inefficiencies, rent rebates, and higher salary and wages to team members, despite store closures.

The brand upsized 11 Adairs stores and opened four new stores during the year. Its National Distribution Centre (NDC) in Melbourne was completed during the first half of the year.

Mocka’s sales were up 6.5 per cent to $64.1 million although higher import freight costs and increased domestic delivery charges resulted in a decline in its gross profit margin.

In its seven months under Adairs’ ownership, Focus on Furniture contributed $81.7 million to sales. Adairs says the brand’s acquisition has a “complementary” customer and product overlap with its existing businesses.

Mark Ronan, CEO and MD of Adairs said: “Significant operational disruptions related to Covid, particularly within our supply chain, impacted the group’s cost base and meant that this growth did not translate into an increase in profits.”

He added that a majority of these costs are not expected to carry into the future years despite recent macroeconomic headwinds.


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