Highlights

  • Group sales rose 3.8% to $641.7 million in FY26, with growth at Adairs and Mocka partly offset by a decline at Focus on Furniture.
  • The company recorded a statutory net loss after tax of $39.4 million, compared to a $25.7 million profit in FY25, driven by a non-cash Impairment and exit costs.
  • Focus on Furniture sales fell 5.6% to $111.3 million, with Underlying EBIT down 67.6% to $3.8 million amid inventory and management transition issues.
  • The Board declared a final fully Franked Dividend of 6.0 cents per share, taking full-year dividends to 11.5 cents, up 9.5% on FY25.

Adairs Limited (ASX:ADH) shares closed at $1.32 on 17 September 2026, down 1.87% or 2.5 cents on the day. The company's FY26 full-year results were released on 24 August 2026, which presented a mixed picture across its three retail brands.

Group Financial Performance

The specialty retailer, which operates the Adairs, Mocka and Focus on Furniture brands, reported growth at two of its three segments alongside a statutory net loss driven by non-cash impairment charges.

Adairs reported group sales of $641.7 million for the 52 weeks ended 28 June 2026, up 3.8% on the $618.1 million recorded in FY25. Gross Margin improved by 10 basis points to 59.0%, attributed to pricing discipline at Adairs and Mocka, partly offset by clearance activity at Focus on Furniture.

Underlying EBITDA rose 1.0% to $68.7 million, while Underlying EBIT declined 0.4% to $55.0 million and Underlying NPAT increased 1.7% to $34.6 million. However, the statutory result told a different story: the company posted a net loss after tax of $39.4 million, compared to a net profit of $25.7 million in the prior year, a swing attributed to the non-cash impairment at Focus on Furniture, SaaS project costs, Adairs New Zealand exit costs and the impact of AASB 16 Lease accounting.

Statutory Earnings Per Share came in at a loss of 22.2 cents, compared to a profit of 14.6 cents per share in FY25. Group net Debt fell 29.6% year-on-year to $47.6 million, equivalent to approximately 0.7 times trailing twelve-month Underlying EBITDA.

Segment Performance: Adairs and Mocka Deliver Growth

The core Adairs Brand delivered sales of $459.2 million, up 3.9%, with like-for-like store sales up 1.4% and online sales up 9.4%. Underlying EBIT for the segment grew 14.9% to $41.1 million, with EBIT margin improving to around 9.0% from 8.1%. The store network was refreshed during the year, with five new stores opened, three upsized or refurbished, and 13 smaller or unproductive stores closed, including eight in New Zealand.

Mocka delivered another period of growth, with sales up 22.9% to $71.2 million, driven by a 38.0% increase in Australian sales. Underlying EBIT for the brand rose 32.1% to $10.1 million, an EBIT margin of 14.1%.

Adairs also completed the exit of its loss-making New Zealand Business during the year, with all stores ceasing trading by year-end. The market had contributed less than 3% of Adairs' business sales, and exit costs of $2.5 million were excluded from underlying earnings.

Focus on Furniture Underperformance

Focus on Furniture reported a difficult year, with sales down 5.6% to $111.3 million and Underlying EBIT falling 67.6% to $3.8 million, following a sharp fourth-quarter decline in a business that had lost pace with the market on product range, store presentation and Marketing over several years.

The previous executive team departed the business during the third quarter, and the resulting management transition left the incoming team with reduced visibility of inventory planning and operating processes. This led to interrupted inventory ordering, reduced product availability and longer delivery lead times, with written and delivered sales in the fourth quarter running well below the prior comparable period.

As announced on 8 July 2026, the Group recognised a non-cash impairment of $63.5 million against the Goodwill and brand intangibles carried for Focus on Furniture, which the company stated has no effect on its cash flow, debt facilities or banking covenants.

Cashflow, Dividends and Trading Update

Underlying operating Cash Flow was reported at $65.0 million. Inventory closed the year at $91.2 million, down 5.0% on the prior year, with Capital Expenditure of $15.6 million weighted toward store development and the company's ERP program.

The Board declared a final fully franked dividend of 6.0 cents per share, taking total FY26 dividends to 11.5 cents per share, up 9.5% on FY25, with a Record Date of 8 September 2026.

In the first eight weeks of FY27, Group sales excluding the exited New Zealand business were down 4.5% on the prior year. Adairs real-time sales were roughly flat, up 0.4%, while Mocka sales rose 15.3%. Focus on Furniture written sales fell 27.6% as inventory availability issues persisted into the new financial year.

What to Watch Next

The company's ability to stabilise Focus on Furniture will be a key area of focus in FY27, with management describing a turnaround built around product renewal, a repositioned brand and customer offer, and stronger retail execution. Recovery in stock availability and delivery lead times is expected into the second quarter of FY27.

Adairs' ERP system replacement, which commenced cutover in July 2026 with the online channel now live on the new platform, represents an ongoing operational transition to monitor, alongside further phases planned for the first quarter of FY27 that will enable capabilities including RFID and Deliver from Store.

Risks

Focus on Furniture's continued underperformance represents the most immediate risk to group earnings, with the company acknowledging that considerable turnaround work remains and that a difficult first half of FY27 is expected as reduced inventory availability and a softer order book carry into the new year.

The company has stated it is not providing FY27 earnings guidance, and its forward-looking statements are subject to known and unknown risks including execution risk associated with the Focus on Furniture turnaround and the ongoing ERP implementation.

Key Takeaways

Adairs' FY26 results reflect a company navigating divergent outcomes across its retail portfolio, with double-digit underlying earnings growth at Adairs and Mocka offset by a marked deterioration at Focus on Furniture that required a $63.5 million non-cash impairment. The statutory net loss, exit of the New Zealand business, and early signs of a Focus on Furniture turnaround all point to a group in the midst of a broader portfolio reset. With FY27 sales tracking down in the initial weeks and the company Withholding earnings guidance, investors are likely to keep a close watch on whether the promised recovery at Focus on Furniture materialises through the remainder of the financial year.