Full Year 2024 Adairs Ltd Earnings Call Transcript
Key Points
- Disciplined purchasing and pricing strategies led to a 170 basis point improvement in gross margin to 60.3%.
- Cost management initiatives and cost-out programs helped offset inflationary pressures, resulting in a flat cost of doing business (CODB).
- Taking over the National Distribution Center (NDC) from DHL delivered supply chain cost savings of $4 million.
- Adairs opened seven new stores, upsized or refurbished six stores, and closed seven smaller stores, resulting in a 3.9% increase in gross lettable area.
- Mocka reported a strong result with total sales up 3.8% and a significant margin improvement of 790 basis points, leading to an EBIT of $6.5 million.
- Group sales were down 4.3% due to higher cost of living pressures and a decline in customer traffic.
- Underlying group EBIT was down 9.8% on the prior year, totaling $57.6 million.
- Focus on Furniture sales declined by 11.1%, reflecting a challenging market environment.
- Inflationary pressures on major cost lines ranged between 3% and 6%, impacting overall profitability.
- The decline in the Australian dollar and normalizing import costs are expected to be headwinds in FY25.
Thank you for standing by, and welcome to the Adairs Limited FY24 results call. (Operator Instructions)
I would now like to hand the conference over to Mr. Mark Ronan, Managing Director and Chief Executive Officer. Please go ahead.
Good morning, everyone, and welcome to the Adairs 2024 financial year results call. Joining me this morning on the call is Ash Gardner, our CFO; and Jamie Adamson, our Head of Investor Relations.
The 2024 financial year was challenging with the macroeconomic environment impacting many households and a significant component of our customer base. However, as this was the environment we expected to be operating in, we planned accordingly, and we're focused on delivering against those elements that were well within our control.
Group sales were down 4.3% with the higher cost of living pressures seeing a reprioritization of household expenditure and a decline in customer traffic. Disciplined purchasing and pricing
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