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- Adairs (ADH) has updated the market on its operations since it decided to temporarily close stores five weeks ago
- In late March, the home goods retailer temporarily closed all Australian stores due to the threat of COVID-19
- However, online operations have continued throughout this period and sales have exceeded all expectations
- Online sales are up 221 per cent compared to this time last year
- Beginning on May 7, Adairs intends to progressively re-open its stores
- However, measures such as social distancing, customer limits, and contactless payments will be put in place
- Adairs has dropped 7.19 per cent on the market and shares are trading for $1.42 each
Adairs (ADH) has updated the market on its operations since it decided to temporarily close stores five weeks ago.
On March 19, the home goods retailer withdrew its FY20 guidance and interim dividend.
A total of $11.8 million was meant to be paid out to shareholders by April 2020, however, the board announced it wanted to maintain strong liquidity and protect value for shareholders.
A week later, on March 27, Adairs announced the temporary closure of all Australian stores for a four to six week period.
These actions were taken in response to the threat of COVID-19 on staff, customers, and their families.
However, Adairs’ online operations have continued throughout this period and sales have exceeded all expectations.
Despite sales dropping by 37 per cent over the last five weeks, reflecting the closures, online sales have skyrocketed 221 per cent. This time last year, online sales were 37 per cent.
Approximately 30 per cent of this 221 per cent increase has come from shoppers who aren’t part of Adairs Linen Lovers club or who have never previously shopped online with the company.
Mocka Australia, a subsidiary of Adairs, also saw a significant 216 per cent jump in sales from this time last year.
Despite operations being turned upside down, Adairs’ balance sheet and liquidity remain strong and the company does not see the need for a capital raise anytime soon.
As of May 4, Adairs has $41 million cash on hand, net debt of $43 million, and undrawn debt facilities of $12.5 million.
Re-opening of stores
Beginning on May 7, Adairs intends to progressively re-open its stores, but with additional measures in place to ensure the health and safety of staff and customers.
These measures include social distancing, customer limits, contactless payments, and the use of hand sanitisers.
Larger stores are expected to open first.
“The company has responded decisively to the changing circumstances with a focus on the health and safety of our team and customers together with the financial position of the business,” CEO and Managing Director Mark Ronan commented.
“Our staged openings reflect our “safety first” approach as we welcome back our team and customers into our stores,” he said.
“There is still a long way to go, however, the actions and contributions made to date put us in a strong position to navigate this changing environment,” he added.
Adairs has dropped 7.19 per cent and shares are trading for $1.42 each at 1:53 pm AEST.
