Feeling good about my decision to sell Adairs (I suspect you share the same sentiment @mikebrisy)

All the results details are here, but very briefly, this is largely a story of falling margins.

Gross margins were down a full percent across the group (now at 58.6%) and EBIT margins were 3.2% lower at 10.3%.

That may not sound like much, but when you consider that revenue was 10% higher, even these declines were enough to drop operating profit by over 16%.

Of course, it's always nice to see the top line grow, but the previous year had lost trading days due to lockdowns and FY23 had a full year contribution from Focus (it only traded for 7 months in FY22).

As has been noted previously, their warehousing issues are a big part of the margin squeeze issue -- costs here were almost 17% over FY23. Higher delivery costs -- up nearly 20% -- meant that the cost of doing business was a full 15% higher. There were also higher employee costs.

Still, a 6.5% net margin aint terrible for a retailer, assuming they can stabilize that and return to stronger normalised top line growth. That's the big question here imo.

A lot of bad news was already priced into shares, but this morning we're seeing a further 11% fall (at time of writing) as Adairs said the first 7 weeks of FY24 have seen a 8.9% decline in sales and said that "the near term outlook is likely to remain challenging..".

No full year guidance, final dividend cut.

Shares on a PE of 6.7. No doubt good value if you think they can turn things around. I just think that they could be in for a very rough period and would want to see some signs that there operational issues have been resolved before i got interested again.