Adairs Limited reported a 1.7% rise in underlying net profit after tax to AUD 34.6 million for the second half of fiscal 2026, as the furniture retailer’s turnaround strategy showed signs of progress. Group sales increased 3.8% to AUD 641.7 million, slightly exceeding guidance of AUD 640 million to AUD 641.5 million.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 1% to AUD 68.7 million, while underlying EBIT declined 0.4% to AUD 55 million. The statutory loss widened to AUD 39.4 million, or AUD 0.222 per share, primarily due to non-cash impairments. Net debt fell 29% year-over-year to AUD 47.6 million, the lowest level in over four years, and operating cash flow more than doubled to AUD 65 million.
The core Adairs brand delivered a 3.9% sales increase to AUD 459.2 million, with like-for-like store sales up 1.4% and online revenue climbing 9% to AUD 132.3 million. Underlying EBIT for the brand rose 14.9% to AUD 41.1 million, supported by a 5.2% improvement in store productivity and a second-half gross margin expansion of 150 basis points to 60.9%. The group plans to open 7 to 10 new stores, refurbish 4 to 6 locations, and close 2 to 5 underperforming outlets, including the exit from New Zealand, which contributed AUD 12.8 million in revenue but an underlying EBIT loss of AUD 0.8 million.
Mocka, Adairs’ specialist brand, posted a 22.9% revenue gain to AUD 71.2 million, with Australian sales up 38% and New Zealand sales flat. Underlying EBIT climbed 32.1% to AUD 10.1 million, while gross margin improved by 80 basis points to 60.2%. Inventory levels fell 14.7%. The brand is expanding beyond nursery products into outdoor, youth, lighting and sofas, with physical store tests underway.
Focus on Furniture, the group’s struggling division, reported a 5.6% revenue decline to AUD 111.3 million, with fourth-quarter sales dropping 25.5%. Underlying EBIT fell 67.6% to AUD 3.8 million, reflecting a first-half profit of AUD 5.8 million and a second-half loss of approximately AUD 2 million. The division recorded a pre-tax impairment charge of AUD 63.5 million, including a AUD 41 million write-down of goodwill to zero and a AUD 22.5 million reduction in brand intangibles.
Adairs declared a fully franked dividend of AUD 0.115 per share, up 9.5% from the prior year and representing 59% of underlying net profit. The company did not provide formal earnings guidance for fiscal 2027 but outlined capital expenditure plans of AUD 25 million to AUD 30 million, excluding a separate AUD 5 million technology upgrade. Roughly 70% of U.S. dollar-denominated expenses for fiscal 2027 are hedged at 67.4 cents, expected to benefit gross margins by 60 to 80 basis points.
The shares rose 2.12% to AUD 1.445 following the results, with a 52-week high of AUD 2.87 and low of AUD 1.18. Key valuation metrics included a P/E ratio of 13.56, a dividend yield of 6.71%, a free cash flow yield of 27%, and a beta of 1.73.
