How Is Adairs Balancing Growth and Challenges in Its FY25 Reset?
Adairs Limited reported a 6.5% sales increase in FY25, powered by strong performances from its Adairs and Mocka brands, while Focus on Furniture struggled. The company is advancing its Vision 2030 strategy with technology upgrades and operational improvements.
- Group sales rose 6.5% to $618.1 million, led by Adairs (+9.5%) and Mocka (+14.7%)
- Underlying EBIT grew modestly by 1.4% to $55.2 million, with Focus on Furniture EBIT down 36.6%
- Statutory net profit after tax declined 18.5% to $25.7 million amid transition costs
- Vision 2030 strategic framework launched, including a $25–30 million ERP technology upgrade
- Strong early FY26 sales growth across all brands, with ongoing store expansions and digital investments
FY25 Performance Overview
Adairs Limited has delivered a solid financial performance for the 52 weeks ended June 29, 2025, with group sales climbing 6.5% to $618.1 million. This growth was primarily driven by the flagship Adairs brand, which posted a 9.5% increase in sales, and Mocka, which surged 14.7%. However, the Focus on Furniture division faced a challenging year, with sales declining 6.5%, reflecting product underperformance and promotional inefficiencies.
Underlying earnings before interest and tax (EBIT) for the group edged up 1.4% to $55.2 million, buoyed by strong EBIT growth at Adairs (+21.2%) and Mocka (+21.1%). Conversely, Focus on Furniture’s EBIT fell sharply by 36.6%, weighing on overall profitability. Statutory net profit after tax (NPAT) declined 18.5% to $25.7 million, impacted by non-recurring costs including leadership transitions and relocations.
Strategic Reset and Vision 2030
FY25 marked the start of a strategic reset under the newly introduced Vision 2030 framework, aimed at positioning the group for sustainable, customer-led growth over the next five years. Managing Director Elle Roseby highlighted the focus on sharpening customer engagement, streamlining operations, and investing in brand, product, and technology innovation.
A centerpiece of this transformation is a major technology upgrade, replacing legacy systems with Microsoft Dynamics 365. This $25–30 million investment, rolling out through FY28, promises enhanced efficiency, smarter inventory management, and improved customer experience through AI-driven tools and mobile capabilities.
Business Unit Highlights
Adairs continued to impress with record sales of $442.2 million and an improved EBIT margin of 8.1%. The brand’s loyalty program, Linen Lovers, now boasts 1 million members, contributing over 80% of sales. Operational improvements at the National Distribution Centre have also yielded significant cost savings.
Mocka’s online-focused model delivered robust growth, particularly in Australia, where sales jumped 31%. The brand is experimenting with physical retail formats, including wholesale and shop-in-shop concepts, with plans to open its first standalone store in H2 FY26.
Focus on Furniture’s performance was subdued, with sales down 6.5% and margin pressure from a weaker Australian dollar and increased discounting. However, recent store refurbishments have shown promising sales uplifts, and early FY26 trading indicates a cautious recovery with a 6.7% sales increase year-to-date.
Outlook and Market Positioning
Early FY26 results are encouraging, with group sales up 22.6% in the first eight weeks, driven by aggressive promotional activity and inventory reductions. The company plans further store expansions across all brands, including 3–5 new Adairs stores and the first Mocka standalone outlet. Capital expenditure is expected to remain elevated due to ongoing technology projects and store developments.
While the discretionary retail environment in Australia and New Zealand remains cautiously optimistic, Adairs is focused on converting sales growth into stronger earnings through operational excellence and strategic investments. The Vision 2030 initiatives, particularly the technology transformation, will be critical to sustaining momentum beyond this transition year.
Bottom Line?
Adairs’ FY25 results reflect a company in transition, strong growth in core brands balanced by challenges and investments that set the stage for future gains.
Questions in the middle?
- How quickly can Focus on Furniture reverse its sales and margin declines?
- What impact will the Microsoft Dynamics 365 ERP rollout have on operational efficiency and costs?
- Will Mocka’s move into standalone retail stores significantly boost its market presence and profitability?
