First half results for FY21

Record sales and underlying EBIT5 exceed guidance

Online sales now 37% of Group Sales

Adairs today released its results for the 26 weeks to 27 December 2020 (1H FY21). The Company has delivered record sales and profitability at a time when its 43 Greater Melbourne Adairs stores were closed for almost half the period1 due to COVID-19 related restrictions. Sales and underlying EBIT exceeded the December 2020 guidance after adjusting for the $6.1 million repayment of the JobKeeper wage subsidy benefit.

1H FY21 (compared to 1H FY20) snapshot2 :

~ Group sales up 34.8% to $243.0 million

        -Adairs sales +20.9% (Online +95.2%, Stores+4.6%; Stores LFL +14.4%3 )

       - Mocka sales +44.4%4 to $28.0 million

        - Group online sales of $90.2 million, 37.1% of Group sales

~ Underlying Group EBIT5 up 166% to $60.2 million (1H FY20 $22.6m)

~ Gross margin up 500 bps

        -Underlying Adairs gross margin +690 bps to 67.8%

        - Underlying Mocka gross margin +230 bps to 53.4%4

~Statutory NPAT $43.9m up 233.4% and EPS 25.9cps (7.8 cps in 1H FY20)

~ Net cash of $22.1 million (compared to net debt of $1.0 million at June 20)

~ Interim dividend of 13.0 cents per share (fully franked) declared

~ Linen Lover membership now exceeds 900,000 customers

~ The Company will repay the JobKeeper wage subsidy benefit for the period ($6.1 million) to the Government

1 Greater Melbourne stores were closed from 6 August 2020 and re-opened on 28 October 2020.

2 See Appendix 3 of the Investor Presentation for a reconciliation of statutory and underlying results.

3 Like for like sales growth (“LFL”) has been adjusted for all store closures, including when Greater Melbourne and South Australian stores were closed due to COVID-19, and is calculated on a store-by-store daily basis (where only stores open on the same day in each corresponding period have been included).

4 For information only. Adairs acquired Mocka in December 2019.

5 Underlying EBIT and NPAT exclude the impact of (i) AASB 16 (Leases), (ii) JobKeeper wage subsidy benefit of $6.1m, (iii) oneoff costs associated with the transition to the new National Distribution Centre, and (iv) non-cash costs associated with the acquisition of Mocka. It does include the impact of the closure of Greater Melbourne stores for c.12 weeks.