Adairs delivers resilient FY26 with sales up 3.8% and dividends lifted 9.5%
In its FY26 full-year results presentation delivered on 24 August 2026, Adairs Limited detailed a year of steady top-line growth, disciplined balance sheet management and a strategic turnaround at one of its three brands. Managing Director and Group CEO Elle Roseby and Group CFO Matt Edmonds presented the numbers to analysts and investors.
Group sales reached $641.7m, up 3.8% on FY25, while underlying net profit after tax (NPAT) rose 1.7% to $34.6m. Net debt fell by $20m, and the Board lifted full-year dividends 9.5% to 11.5 cps.
The presentation framed the business as “three brands at three stages”: Adairs growing profitably, Mocka scaling fast, and Focus on Furniture in turnaround. Notably, the group reported a statutory NPAT loss of -$39.4m, driven predominantly by non-cash items, chiefly the Focus on Furniture impairment. The operating business itself remained solidly profitable.
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FY26 results at a glance
Management presented the group-level performance across the key metrics below.
| Metric | FY26 | FY25 | Change |
|---|---|---|---|
| Group sales | $641.7m | $618.1m | +3.8% |
| Underlying EBITDA | $68.7m | $68.0m | +1.0% |
| Underlying EBIT | $55.0m | $55.2m | -0.4% |
| Underlying NPAT | $34.6m | $34.0m | +1.7% |
| Statutory NPAT | -$39.4m | $25.7m | n.m. |
| Dividends per share | 11.5 cps | 10.5 cps | +9.5% |
| Net debt | $47.6m | $67.6m | -$20.0m |
Key channel highlights from the presentation included:
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Online sales rose 12.6%, now representing 32.6% of group sales (FY25: 30.1%).
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In-store sales were broadly flat, up 0.1%.
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The cash realisation ratio was approximately 120%, with underlying operating cash flow of $65.0m.
Three brands, three stories
The strategic core of the update centred on the differing trajectories of the group’s three brands.
Adairs — elevating product, growing earnings
The Adairs brand recorded sales of $459.2m, up 3.9%, with underlying EBIT climbing 14.9% to $41.1m and the EBIT margin expanding 90bps to 9.0%. Management highlighted a strong second half, where EBIT grew 48.9% after the Q1 clearance reset and H2 gross margin improved 150bps.
The Linen Lovers loyalty programme held steady at approximately 1m paying members, contributing more than 80% of sales. The presentation referenced continued traction from the Vision 2030 strategy and the “Store of the Future” format. The New Zealand market was exited during the year.
Mocka — scaling fast with expanding margins
Mocka delivered record sales of $71.2m, up 22.9%, with underlying EBIT rising 32.1% to $10.1m and an EBIT margin of 14.1%. Growth was Australia-led, up 38.0%, while New Zealand stabilised at 0.4%.
The brand opened its first standalone stores at Maroochydore, QLD (June 2026) and Tower Junction, NZ (July 2026), described by management as a deliberate test-and-learn exercise.
Focus on Furniture — turnaround underway
Focus on Furniture reported sales of $111.3m, down 5.6%, with underlying EBIT falling 67.6% to $3.8m. Management characterised FY26 as a “year of two phases”: sales were broadly flat through Q1–Q3, up 0.2%, before a sharp Q4 decline of 25.5%.
The presentation attributed the downturn to two controllable issues: a difficult leadership transition in Q3 with limited handover, and a stale range coupled with under-investment in store presentation. A new divisional CEO commenced in November 2025, and a non-cash impairment of $63.5m pre-tax was recorded, writing goodwill down to nil. Management framed the situation as a turnaround with a clear remediation plan.
Understanding the statutory loss
A key investor education point from the update was why a profitable, cash-generative business reported a statutory loss.
Underlying results strip out one-off, mostly non-cash items to show ongoing operating performance. A non-cash impairment is an accounting write-down of goodwill or brand value that does not affect cash on hand or banking covenants.
The $63.5m pre-tax write-down had been partially anticipated by the market following the non-cash impairment guidance flagged in July, when Adairs signalled a $62m-$68m charge against Focus on Furniture goodwill ahead of the full results presentation.
The bridge from underlying NPAT to the statutory result comprised the following items:
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Focus on Furniture impairment: -$56.7m post-tax (non-cash)
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Adairs NZ exit costs: -$1.8m post-tax
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Technology (ERP/SaaS) project costs: -$13.0m post-tax
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AASB 16 leases impact: -$2.4m
The operating business remained solidly profitable, and the write-downs represent accounting adjustments rather than cash losses. The source explicitly noted there was no impact on cash flow or banking covenants.
Balance sheet strengthens as net debt falls to four-year low
The company detailed a materially strengthened financial position. Net debt fell $20m to $47.6m, equivalent to 0.7x underlying EBITDA, described as the lowest level in four years.
Underlying operating cash flow rose to $65.0m (FY25: $30.4m), with $17.0m of debt repaid and $13.4m of dividends paid during the year. Closing inventory of $91.2m was down 5.0%, leaving what management described as a clean position entering FY27.
The final dividend of 6.0 cps fully franked brought total FY26 dividends to 11.5 cps, representing 59% of underlying NPAT, with a dividend reinvestment plan available.
The Focus on Furniture two-year turnaround plan
Management outlined a two-year remediation roadmap for Focus on Furniture, applying the same product-led playbook already executed at Adairs and Mocka. The plan is structured around three pillars:
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Product and range renewal — exclusive, design-led collections from October FY27 with regular monthly newness, clearer category price architecture and a broader supplier base.
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Brand and customer — refreshed brand messaging, a disciplined trade calendar, a rebuilt website and an upgraded CRM.
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Retail execution — a structured selling programme, new store incentives, and progressive refurbishments to the Frankston-validated format.
On the expected trajectory, management indicated H1 FY27 will remain difficult as the weaker Q4 order book carries into the new year, with benefits emerging through H2 FY27 and building into FY28. Longer term, a national roll-out is targeted to re-initiate post-turnaround, aiming for 40–50 stores over approximately five years, against 27 showrooms today.
FY27 trading update and outlook
The presentation provided a first-eight-weeks trading snapshot for FY27.
| Brand | First 8 weeks vs FY26 |
|---|---|
| Adairs (Australia) | +0.4% |
| Mocka | +15.3% |
| Focus | -27.6% |
| Group (ex. Adairs NZ) | -4.5% |
Management noted material timing differences at Adairs, including Linen Lover events and the cycling of prior-year clearance. Internal analysis indicated Australian sales were tracking at approximately 2% versus the prior corresponding period, with gross margin ahead of last year.
Mocka’s momentum continued in Australia, with the new stores trading in line with expectations. At Focus on Furniture, the 27.6% decline was measured on written sales, with an order book of $11.8m, and inventory availability issues expected to recover through Q2 FY27.
Key outlook points from the update included:
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FY27 is focused on improved earnings quality and consistency.
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The new Adairs ERP system goes live in early FY27, with implementation risk being actively managed.
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FY27 group capex is expected to rise to up to $25m (FY26: $15.6m), around 50% of which remains uncommitted.
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Approximately 75% of FY27 USD exposure is hedged at 67.4c.
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The Adairs NZ exit is expected to be EBIT accretive to the group from FY27, with around 3% of sales exiting the Adairs comparison base.
What FY26 means for investors
The presentation positioned the investment case around a portfolio in transition. Adairs and Mocka now generate over 90% of group earnings, and both are growing strongly, while the Focus on Furniture challenge is defined, quantified and supported by a management plan.
Combined with a net debt reduction of $20m, the balance sheet has been materially de-risked. Key considerations for investors include:
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Two of three brands now drive the majority of group earnings and continue to grow.
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The dividend was lifted 9.5% despite the non-cash statutory loss.
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The balance sheet reached its lowest net debt level in four years.
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Focus on Furniture remains the primary near-term watch-point.
The investment case ultimately rests on the durability of the Adairs and Mocka growth engine, alongside successful execution of the Focus on Furniture turnaround over the coming two years.
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