Adairs Limited reported group sales of $641.7 million for the fiscal year ended June 28, 2026, a 3.8% increase from the prior year, as core brands Adairs and Mocka drove growth while Focus on Furniture continued its turnaround.
Underlying earnings before interest, tax, depreciation and amortization (EBITDA) rose 1.0% to $68.7 million, with underlying net profit after tax up 1.7% to $34.6 million. Gross profit increased 4.4% to $302.2 million, supported by a 10-basis-point improvement in gross margin to 59.0%. However, total cost of doing business rose 4.7% to $310.2 million, absorbing 48.3% of sales, up 40 basis points year-over-year.
The company’s net debt declined to $47.6 million, the lowest level in four years, at 0.7 times underlying EBITDA. Underlying operating cash flow totaled $65.0 million, achieving a 120% cash realization ratio. Inventory levels fell 5.0% to $91.2 million, while capital expenditure reached $31.3 million, including $15.7 million in expensed SaaS and ERP project costs.
Adairs declared a full-year dividend of 11.5 cents per share, a 9.5% increase, with the final dividend of 6.0 cents per share fully franked. The group’s shares rose 2.47% to $1.45 following the presentation, within a 52-week range of $1.18 to $2.87.
Brand performance diverged significantly. Adairs, the group’s flagship brand, posted sales of $459.2 million, up 3.9%, with underlying EBIT rising 14.9% to $41.1 million. Online sales accounted for 28.8% of Adairs revenue, up 140 basis points, while gross margin declined 10 basis points to 60.9%. The company’s Linen Lovers loyalty program maintained roughly 1 million paying members, contributing over 80% of sales.
Mocka delivered the strongest growth, with sales up 22.9% to $71.2 million and underlying EBIT rising 32.1% to $10.1 million. EBIT margin expanded 100 basis points to 14.1%, supported by an 80-basis-point improvement in gross margin to 60.2%. Digital channels drove 97.5% of sales, though the brand opened its first standalone physical stores in Maroochydore, Queensland, and Tower Junction, New Zealand, in mid-2026.
Focus on Furniture, the group’s underperforming segment, reported sales of $111.3 million, down 5.6%, with underlying EBIT falling 67.6% to $3.8 million. EBIT margin contracted 660 basis points to 3.4%, as Q4 sales declined 25.5%. The brand operates 27 showrooms, including one new store in Tuggerah, New South Wales.
A non-cash impairment charge of $63.5 million pre-tax ($56.7 million post-tax) was recorded on Focus on Furniture’s goodwill and brand intangible assets, reducing goodwill to nil. Additional significant items included $1.8 million in New Zealand exit costs, $13.0 million in technology upgrade expenses, and $2.4 million in AASB 16 lease accounting impacts.
The group closed a net five Australian stores and eight New Zealand locations as part of portfolio optimization, ending with 188 total stores. Adairs NZ contributed $12.8 million in revenue with an underlying EBIT loss of $0.8 million prior to exit costs before its planned exit in March 2026.
For the first eight weeks of FY27, group sales excluding Adairs NZ declined 4.5% year-over-year. Adairs Australia reported real-time sales growth of 0.4%, while Mocka continued its momentum with a 15.3% increase. Focus on Furniture’s written sales fell 27.6%, with an order book of $11.8 million. The group has hedged approximately 75% of its FY27 USD requirements at 67.4 cents, compared with 66.4 cents in FY26. FY27 capital expenditure is projected at up to $25 million, with around $5 million remaining for Adairs’ technology upgrade and ERP-related costs of $1.1 million annually.
