Adairs Limited
Revised FY18 Earning Guidance: Adairs Limited (ASX: ADH) upgraded FY18 earning guidance after strong sales in Manchester and Homewares. With this news, the stock price climbed up 13.821 per cent on April 20, 2018 with 6.35 per cent fall of last one month. As per the latest update, EBIT is forecasted to be between $44 million and $46.5 million, up from previous guidance range of $40 Mn- $44 Mn. Sales is estimated in the range of $310 Mn - $315 Mn for FY18 from earlier guidance of between $300 Mn - $310 Mn. On a financial year to date basis performance (to 15 April), the group delivered like for like sales growth of +16% and this represents further strengthening in sales in upcoming period. In particular, Adairs’ online sales performance remains outstanding and generating year to date sales growth of +99%. Further, net debt at year end is expected to be between $12 million and $16 million, which may lead Adairs to being able to consider capital management initiatives in FY19.
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Revised Earnings Guidance (Source: Company Reports)
This further upgrade to FY18 earnings guidance reflects the continued higher sales performance based on over the last two months, and we expect that the group will augur for growth in rest of the financial year. Further, we believe the FY18 result will provide a solid platform for continued growth into FY19. The Company’s annual dividend yield is 5.42 per cent and the Board declared an interim dividend of 5.5 cents per share which will be paid on 24 April 2018. Based on upwardly revised earnings for FY18, we give a “Hold” recommendation on the stock at the current market price of $ 2.100.
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