Highlights

  • Adairs expects FY26 Group sales of AUD 640.0 million to AUD 641.5 million, up 3.7% at the midpoint on FY25.
  • FY26 Group underlying EBIT is expected between AUD 53.5 million and AUD 55.5 million, down 1.3% at the midpoint.
  • Adairs and Mocka delivered earnings growth, while Focus on Furniture continued to underperform.
  • The Group expects a non-cash impairment of AUD 62 million to AUD 68 million related to Focus on Furniture goodwill and brand intangible assets.
  • After significant items, Adairs expects to report a FY26 statutory net loss after tax of approximately AUD 43 million.

Adairs Ltd (ASX:ADH) has released a FY26 trading update and advised the market of an expected non-cash impairment relating to its Focus on Furniture business unit. The update covers the financial year ending 28 June 2026, with the company’s full-year results scheduled for release on 24 August 2026.

Adairs shares were trading at AUD 1.46 during the afternoon session on 8 July 2026, down 2.01% for the day. The stock also remains down 30.14% over the past year. The share price information is separate from the company’s update, which focused on FY26 trading expectations, business unit performance, impairment charges, significant items and the Group’s capital position.

Company Overview: What Adairs Does

Adairs is an Australian omni-channel specialty retailer focused on home furnishings, homewares and furniture. The Group operates three main business units: Adairs, Focus on Furniture and Mocka.

The Adairs brand sells home furnishings and homewares through physical stores and online channels. Focus on Furniture operates in furniture and bedding, while Mocka is a digital-first furniture business operating in Australia and New Zealand. Together, these businesses give the Group exposure to household goods, furniture, bedding and online retail.

The FY26 update shows differing performance across the portfolio, with Adairs and Mocka delivering growth while Focus on Furniture continued to face earnings pressure.

FY26 Sales Expected to Rise, but EBIT Slightly Lower

Adairs expects FY26 Group sales to be between AUD 640.0 million and AUD 641.5 million. At the midpoint, this represents growth of 3.7% compared with FY25 sales of AUD 618.1 million.

However, underlying EBIT is expected to be between AUD 53.5 million and AUD 55.5 million. At the midpoint, this reflects a 1.3% decline compared with FY25 underlying EBIT of AUD 55.2 million.

The difference between sales growth and EBIT movement reflects mixed business unit performance. Growth from Adairs and Mocka was offset by weaker trading and earnings deterioration at Focus on Furniture.

Adairs Brand Delivers Positive Growth

The Adairs business unit is expected to report FY26 sales of AUD 458.5 million to AUD 459.0 million, compared with AUD 442.2 million in FY25. This represents growth of 3.7% at the midpoint.

Underlying EBIT for Adairs is expected to be between AUD 40.5 million and AUD 41.5 million, up 14.6% at the midpoint from AUD 35.8 million in FY25.

The company said Adairs delivered positive like-for-like sales growth of 3.8%, supported by improvements in product ranges, better in-store customer experience and continued online channel growth.

Gross margin improved during the second half of FY26, and the company expects this improvement to be sustained into FY27. Adairs also continued its store renewal strategy, with the new store concept at Bondi Junction delivering encouraging results. Lessons from that store are now being applied across a broader refurbishment program covering small, medium and large store formats.

The company also exited a small number of underperforming stores as planned.

Mocka Continues to Expand

Mocka delivered another year of growth, led by the Australian market. FY26 sales for Mocka are expected to be between AUD 70.5 million and AUD 71.0 million, compared with AUD 57.9 million in FY25. At the midpoint, this reflects growth of 22.1%.

Underlying EBIT is expected to be between AUD 9.5 million and AUD 10.0 million, up 28.1% at the midpoint from AUD 7.6 million in FY25.

The company said Mocka’s Australian sales grew by around 40%. In New Zealand, management is introducing a more distinct trading and product strategy to support sales momentum.

Mocka also opened its first standalone retail store in Maroochydore in mid-June 2026. A second store is planned for Tower Junction in Christchurch in Q1 FY27, followed by a third store at Mornington in Victoria in Q2 FY27. These three stores form the initial trial of physical retail for the Mocka brand.

Focus on Furniture Remains the Key Pressure Point

Focus on Furniture was the weakest performer in the Group’s FY26 update.

Sales for Focus are expected to be between AUD 111.0 million and AUD 111.5 million, compared with AUD 117.9 million in FY25. This represents a 5.7% decline at the midpoint.

Underlying EBIT is expected to fall sharply to AUD 3.5 million to AUD 4.0 million, compared with AUD 11.8 million in FY25. At the midpoint, this represents a decline of 68.3%.

Adairs said the business faced intense competitor promotional activity, conversion pressure, product underperformance and execution challenges. The company also noted that Focus continued to decline during H2 FY26.

A new management team has been appointed progressively during the year. The business is being rebuilt across product, marketing, retail execution and operating processes. Adairs said H2 FY26 was an important period of operational change for Focus, with work being done to lay the foundation for improved performance as FY27 progresses.

Non-Cash Impairment to Impact Statutory Result

Adairs expects to recognise a non-cash impairment charge of AUD 62 million to AUD 68 million relating to Focus on Furniture goodwill and brand intangible assets. After tax, the expected charge is AUD 56 million to AUD 60 million.

The impairment reflects all of the Focus goodwill, valued at AUD 40.9 million, and a substantial portion of the brand intangible asset. Adairs said the impairment follows continued earnings deterioration during H2 FY26 and reflects the expectation that remediation of the business will take an extended period.

After the impairment, the residual carrying value of the Focus business unit is expected to be approximately AUD 25 million to AUD 31 million. This includes the remaining brand intangible and net tangible operating assets, excluding lease right-of-use assets and related lease liabilities.

The company said the impairment remains subject to final testing, Board approval and external audit concurrence.

Other Significant Items Add to FY26 Charges

In addition to the Focus impairment, Adairs expects to exclude several significant items from underlying earnings in FY26.

Adairs completed its exit from the New Zealand market during FY26. Exit-related costs are expected to total between AUD 3.5 million and AUD 4.0 million. These costs include lease surrenders and modifications, make-good obligations, employee-related costs, store asset and inventory impairments and other administrative expenses.

The company said New Zealand accounted for 3.0% of Adairs revenue in FY26 and was a small, loss-making region for the brand. The exit is expected to improve Group underlying EBIT and EBIT margin from FY27.

Adairs also continued investing in its technology and data upgrade program, including a new ERP system. As the platform is Software-as-a-Service, related expenditure must be expensed immediately. SaaS project costs are expected to be between AUD 18.0 million and AUD 19.0 million in FY26, including AUD 2.8 million of non-cash write-offs relating to legacy infrastructure.

The new ERP system is scheduled to go live in late Q1 FY27, with total program costs in line with overall guidance.

Statutory Net Loss Expected for FY26

After the impairment, SaaS project costs, New Zealand exit costs, the impact of AASB 16 Leases, net interest and tax, Adairs expects to report a FY26 statutory net loss after tax of approximately AUD 43 million.

The company indicated the expected range is around AUD 39 million to AUD 46 million.

Adairs noted that underlying EBIT is a non-statutory measure and that a full reconciliation between underlying earnings and statutory results will be provided when the FY26 full-year results are released on 24 August 2026.

Net Debt Improves Year-on-Year

Adairs ended June 2026 with net debt of approximately AUD 49 million, compared with AUD 67.6 million at the end of June 2025.

The company said net debt remains comfortably within facility limits of AUD 135 million. It also stated that the Focus on Furniture impairment is non-cash and raises no covenant concerns.

The impairment does not affect the Group’s franking account and is not expected to affect Adairs’ capacity to pay a dividend for FY26. Any final dividend will be determined by the Board alongside the FY26 results.

What This Means for Investors?

Adairs’ FY26 update shows a mixed performance across the Group. The Adairs brand and Mocka delivered sales and earnings growth, while Focus on Furniture continued to weigh on overall profitability. The expected non-cash impairment of AUD 62 million to AUD 68 million is set to drive a statutory net loss for FY26, although underlying EBIT is expected to remain positive at AUD 53.5 million to AUD 55.5 million. Investors may watch the FY26 results release in August for further detail on Focus remediation, Mocka’s retail trial, the ERP go-live and whether the Adairs brand can maintain its recent margin improvement into FY27.

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