At the Morgans Queensland Conference, Adairs Limited (ASX: ADH) has highlighted their key focus to deliver the ongoing sales via online mode or through the store networks. Its has also shared their business target for the FY 19 to increase the sales growth to be in between 5 to 8 %, and the strategies of achieving the sales growth which has now become the most common question amongst the management.
Over the last 5 years, company has expanded its product range materially which forms the core business strategy. From the period of FY15 till FY18, the company has shown its expansion in positive direction. For FY15, the expansion was 33.6%, which reached 39.3% in the FY18. The company is planning to upsize the existing stores which enable the customers with more options and provide the expanded product range, making the shopping experience more enjoyable which will also enhance the returns of the company. The company has prior experience increase in sales by 35% ($5.5 million). The company provides various omni channels which is also one of the driving growth factors of the company. Over the span of time from year 2013 to 2018 the percentage of total sales has gone up from 5% to 13% in this category. Statistics of the company says that per active member annually spent $242 via online shopping. Per active member annually spent $374 through story only. Per active member annually spent $701 both ways i.e. online shopping ($291) and shopping through stores ($510). At the end of the year as per the financial outlook, number of stores was between 171-173. Sales made was between $345 million to $360 million with gross profit margin ranging between 59% to 61%. EBIT was between $47.5 million to $51.5 million. The capital investment was ranging between $8 million to 10 million. For the ending of 52 weeks on 1 July 2018, the company has made a profit of A$32.296 million. The company has generated a revenue from the sales of the goods worth A$ 314.769.
ADH also shows a strong balance sheet where the company has total asset worth A$ 194.993 million and total liabilities of A$ 78.813 million indicating company’s strong potential to pay its long-term obligations. The company has generated A$ 39.091 million from its operating activities. It also acquired property, plant, equipments and intangibles worth A$ 7.095 million. The company has also made repayment of borrowings worth A$17 million. Dividend payment was made worth A$16.587 million which resulted in the net cash used in investing activities worth A$ 33.587 million. There was a net decrease in the cash and cash equivalent worth A$1.591 million. This resulted in the net cash and cash equivalent at the end of the period with the company to be A$12.718 million.
Within a span of 1 year we see that the performance of the company was 41.82%. The YTD performance is showing 24.47% returns in terms of stock performance. The share price of the company was A$2.38 (up 1.7% on October 12, 2018) with market capitalization of A$ 388.15 million and PE ratio 12.72x.
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