Adairs (ASX:ADH) finished FY2026 with two parts of its Business pulling in opposite directions. The homewares Brand and the online-led Mocka grew earnings, while Focus on Furniture went backwards and triggered a write-down that pushed the group to a statutory loss. Underlying Profit still edged higher, the Dividend rose, and net Debt fell almost 30 per cent. With a Market Capitalisation of about A$227 million as at 11 September 2026, the turnaround underway at the furniture arm is the swing factor.

Latest Development

Adairs released its FY2026 results on 23 August 2026 for the year ended 28 June 2026. Group sales rose 3.8 per cent to A$641.7 million and underlying net profit after tax lifted 1.7 per cent to A$34.6 million, giving underlying Earnings per share of 19.5 cents.

The statutory line told a harsher story: a loss of A$39.4 million against a A$25.7 million profit in FY2025, driven by a A$63.5 million non-cash Impairment of Focus on Furniture flagged on 8 July 2026. The board still declared a fully franked final dividend of 6.0 cents, taking the full-year payout to 11.5 cents, up 9.5 per cent, with a Record Date of 8 September 2026 and payment due 1 October 2026.

Company Overview

Listed since June 2015, Adairs operates three retail brands. The namesake Adairs chain sells bed linen, homewares and soft furnishings and runs the Linen Lovers loyalty programme, which held steady at around one million paying members contributing more than 80 per cent of that brand's sales. Mocka is a largely online furniture and homewares business, and Focus on Furniture sells furniture through a store network.

Group online sales reached 32.6 per cent of the total in FY2026, up from 30.1 per cent.

Financial and Operational Position

Adairs brand sales grew 3.9 per cent to A$459.2 million, with like-for-like store sales up 1.4 per cent and underlying EBIT up 14.9 per cent to A$41.1 million. The New Zealand exit closed eight stores at a cost of A$2.5 million. Mocka lifted sales 22.9 per cent to A$71.2 million and EBIT 32.1 per cent to A$10.1 million. Focus on Furniture sales fell 5.6 per cent to A$111.3 million and its underlying EBIT dropped 67.6 per cent to A$3.8 million.

Net debt closed at A$47.6 million, down from A$67.6 million, or roughly 0.7 times underlying EBITDA. Underlying Operating Cash Flow was A$65.0 million, inventory fell 5.0 per cent to A$91.2 million and Capital Expenditure was A$15.6 million.

What Investors May Watch Next

Trading in the first eight weeks of FY2027 showed group sales down 4.5 per cent excluding the exited New Zealand operations, with Adairs roughly flat, Mocka up 15.3 per cent and Focus written sales down 27.6 per cent on an order book of A$11.8 million against A$13.4 million a year earlier. The Focus turnaround runs across FY2027 and FY2028, with design-led exclusive ranges due from October. Capital expenditure is budgeted at A$25 million for FY2027, about half uncommitted. The 2026 annual general meeting, flagged on 1 September 2026, is the next scheduled event.

Risks

No FY2027 earnings guidance was provided. Focus on Furniture is the clear pressure point, with written sales and order book both down and a two-year recovery plan yet to prove itself. Discretionary homewares and furniture spending is sensitive to interest rates and housing activity. Imported product exposes margins to currency and freight costs, and Lease and store commitments limit how quickly the cost base can flex.

Key Insights

For investors weighing ASX retail names this September, Adairs offers a clear split between what is working and what is not. The core brand and Mocka delivered growth, the Balance Sheet improved and the dividend rose, yet a soft start to FY2027 and an unproven furniture turnaround temper the picture. Whether the stock stays in focus may depend less on homewares trading than on evidence that Focus on Furniture has stopped deteriorating.