Investors savaged bedding and homeware chain Adairs after the company revealed just how badly it had been affected by Covid-driven supply woes and forced lockdowns.
Shareholders were quick to pull their heads under the cover on Monday, wiping $150 million from the national retailer’s value, after it admitted the rolling supply chain crisis had ratcheted business costs higher and disrupted stock flow from Asia.
Trading days at its bricks and mortar outlets were cut in half in NSW and Victoria during the first six months of the year amid Delta wave restrictions, costing the company between $30 million and $36 million in earnings.
Adairs’ share price fell by 22 per cent to $2.93 after Monday’s update – its lowest price in 13 months – with the firm joining a slew of ASX companies who have made early earnings season confessions.
Candlemaker and mall staple Dusk was another retailer to blame supply chain issues and lockdowns for an underwhelming six months, its own share price falling to a near 11-month low $2.65.
“In addition, when store were open, foot traffic in centres was significantly lower as many shoppers appear to have exercised caution as the potential risk of infection of the Omicron variant of Covid-19 escalated through December,” Dusk wrote to shareholders.
Adairs, meanwhile, said its balance sheet had been helped somewhat by a $12.5 million contribution from its recent acquisition Focus on Furniture while online furniture division Mocka boosted its sales by more than 20 per cent.
This was offset by troubles in setting up its new national distribution centre, while ongoing workforce shortages and the absence of rental rebates and JobKeeper subsidies have also hurt to company.
While Adairs’ first-half sales were only slightly lower compared to the same period in 2020 – and like-for like sales have grown by 2.7 per cent – the company said it expects underlying earnings to almost halve to $33 million for the six months to December 26.
Despite initially being caught up in the 2020 sharemarket meltdown, Adairs was among a number of companies to rebound strongly as locked-down Aussies splashed their stimulus cash on homewares and electronics.
Along with the likes of Temple and Webster, Nick Scali, Kogan, JB Hi-Fi, and Harvey Norman, Adairs was a major Covid winner, blowing past its pre-Covid valuation within six months of the pandemic arriving.
At one point Adairs had expanded by more than 800 per cent on its Covid nadir.
The company will release audited first-half results on February 21.
