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Adairs share price soars 16% on trading update and FY20 guidance

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The Adairs Ltd (ASX: ADH) share price is soaring today after the ASX retailer delivered a trading update and provided FY20 sales guidance.

At the time of writing, Adairs shares have risen 16.43% and are up more than 370% since the bottom of the bear market in March.

In late March, Adairs announced the closure of Australian and New Zealand stores in response to COVID-19. The retailer flagged the reopening of stores in early May, which came with a trading update that revealed a 221% online sales surge.

What did Adairs announce today?

With all stores having been open for at least two weeks, Adairs provided a trading update this morning on its performance for the 24 weeks to 14 June 2020 (second half to date) and 50 weeks to 14 June 2020 (year to date).

For some context, New Zealand stores closed on 24 March and re-opened on 14 May. Meanwhile, Australian stores closed on 30 March and progressively re-opened from 7 May to 29 May.

Additionally, Adairs’ online businesses in New Zealand were closed from 25 March to 28 April due to government restrictions.

For the second half to date, Adairs’ brick and mortar stores recorded 5.3% like-for-like sales growth, while its online channel grew by 92.6%. These figures led to total like-for-like sales growth of 27.4%. Meanwhile, sales for the online-only Mocka brand were up 52.1% over the same period.

Turning to year-to-date numbers, like-for-like sales growth for Adairs stores came in at 3.5%. Adairs’ online channel posted 64% growth in the period, leading to 15.7% total sales growth for the Adairs business.

FY20 guidance

The retailer also provided FY20 sales guidance this morning as the end of its financial year quickly approaches.

The company expects full-year group sales to be in the range of $385 million to $390 million. This comprises sales guidance for the Adairs business of between $358 million and $362 million, and a 30-week contribution from Mocka in the range of $27 million to $28 million.

The online channel for the Adairs brand is expected to account for approximately 27% of Adairs sales.

Commenting on today’s update, managing director and CEO Mark Ronan said:

“Since Adairs stores re‐opened we have seen strong sales across both the store network and online channel as customers return for the instore service and experience they expect from Adairs. Pleasingly, Mocka’s sales growth has also continued at high levels.”

“Our omni channel strategy and focus on the home decorating and furnishing category has served us well during this period where our customers have spent significantly more time at home,” he added.

Adairs expects to announce its FY20 results on Wednesday, 26 August 2020.

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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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