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Executives at bedding retailer Adairs (ASX: ADH) will get a good night's sleep this evening following the release of the company's 1H20 financial results today.
Adairs continued to buck the trend of ailing Australian retail in the half, posting record sales of $178.9 million in the half, up 8.6 per cent on 1H19.
A cornerstone moment for the omni-channel retailer in 1H20 was the acquisition of pure-play home living products retailer Mocka for $81.8 million in December 2019.
Even with the purchase of Mocka Adairs managed to pull off record profitability, recording gross profit of $109.3 million, and NPAT up 4.2 per cent to $15.7 million.
"The first half of FY20 was significant for Adairs with record levels of sales and profitability, the acquisition of Mocka and the finalisation of our domestic supply chain strategy," says Adairs managing director and CEO Mark Ronan.
"We continued to deliver above market sales growth with group like for like sales up 6.9 per cent and online sales up 31.6 per cent (excluding Mocka)."
Playing both online and offline is a strategy that appears to be working well for the listed retailer, with online sales now representing 18 per cent of total group sales.
"Our omni-channel strategy combining the strong engagement from our Linen Lovers members, our digital strategy and integrated inventory availability continues to maximise sales and customer service across all channels," says Adairs.
After reviewing its supply chain Adairs has announced that it intends to work with DHL to operate a new purpose-built national distribution centre (NDC) to be launched in early 2021.
Adairs says the NDC is an important component in its omni-channel strategy; allowing customers to be able to shop when and where they want to.
It is expected that the facility will have the capacity to support the retailer's growth over the next ten years across all channels.
"Consolidating our multiple DC operations into a single NDC will improve stock flow and online fulfilment, increase stock availability and improve service levels for both stores and customers during peak trading periods," says Adairs.
In the second half the company intends to open one to two new stores and upsize three to five stores across Australia and New Zealand.
However, with the "potential impact" of the coronavirus Covid-19 still uncertain Adairs has elected to leave its FY20 guidance unchanged.
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