Adairs slumps 30 per cent on another guidance cut
Adairs shares have lost more than 30 per cent after the homewares and manchester retailer issued another earnings downgrade, citing supply chain challenges.
The company announced on Friday it had observed “an adverse change” in trading momentum since the end of May, with sales growth completely flat over the first three weeks of June.
Adairs chief executive Mark Ronan said the performance marked a material reduction from the 9.0 per cent like-for-like sales growth recorded up until May 27.
The company said it was therefore revising its FY19 earnings guidance of $46 million to $50 million – itself flagged as a downgrade at February’s half-year results – to between $42.5 million and $44 million.
Its FY19 sales guidance has also been narrowed from between $340 million and $355 million, to between $340 million and $345 million.
Shares in Adairs closed 31.32 per cent, or 57 cents, lower on Friday at a near two-year low of $1.25.
Ronan admitted the update was disappointing but insisted the company was still healthy and growing.
“We have specific issues to address to improve our supply chain capacity, productivity and efficiency,” Ronan said.
Ronan said he expected full-year like-for-like sales growth to be between 7.0 per cent and 8.0 per cent, which he said was in line with the company’s long-term targets.
He said online sales had grown 40 per cent in the second half to date and will represent 17 per cent of total sales for the year.
In February, the company reported a first-half profit increase of 6.83 per cent to $14.89 million, following a period of significant online growth.
But the company moderated its full-year earnings guidance as it braced for the impact of a depreciating Australian dollar “and a potentially more challenging consumer environment”.
Adairs shares have fallen 33.51 per cent so far in 2019.