Adairs Sees Modest FY26 Sales Growth Despite Focus on Furniture Struggles

Bedding and homewares group Adairs (ASX: ADH) expects its total sales for financial year 2026 to be in the range of $640 million to $641.5m, representing a 3.7% increase on the previous corresponding period.

Underlying EBIT is expected to be in the range of $53.5m to $55.5m, or down 1.3% on the same period.

The group provided a trading update to shareholders today together with notice of an expected non-cash impairment in the range of $62m to $68m attributable to the “goodwill and brand intangible asset” of its omnichannel Focus on Furniture business unit.

The unit’s performance continued to decline in the second half of the year reflecting intense competitor promotional activity, conversion pressure, product under-performance and execution challenges.

A new management team has been appointed to implement a program of operational improvements with a view to re-platforming the business for growth and materially boosting earnings into the new financial year.

Residual Carrying Value

Following the impairment charge, the aggregate residual carrying value of the Focus on Furniture business (comprising the remaining brand intangible and net tangible operating assets, but excluding lease right-of-use assets and corresponding lease liabilities) is expected to be in the range of $25m to $31m.

The impairment is a non-cash accounting charge will not affect the group’s franking account, and is not expected to affect its capacity to pay a shareholder dividend.

It will be excluded from underlying earnings, as will items such as market exit costs for Adairs New Zealand of up to $4m, and software-as-a-service project-related costs of up to $19m.

After these exclusions, Adairs expects to report a statutory net loss after tax of approximately $43m.

Mocka Sales Growth

Adairs and homewares e-commerce brand Mocka delivered sales and earnings growth for the year, with underlying EBIT up 14.6% and 28.1% respectively on the prior year, offset by Focus on Furniture’s under-performance.

Adairs made substantial progress in delivering positive like-for-like sales growth (up 3.8%) supported by product range enhancements, improved in-store customer experience and continued growth of its online channel.

A new store concept launched at Bondi Junction in New South Wales delivered encouraging early results, and—after a small number of underperforming stores were closed down as planned—the group is now expanding into a broader refurbishment program across a range of store formats.

Mocka’s growth was driven by the Australian market where online sales increased by around 40%.

The brand’s first standalone retail store opened in last month at Maroochydore in Queensland, and an expanded trial of physical retail operations will see new stores opening early next year in Tower Junction in Christchurch and Mornington in Victoria.