Adairs Ltd. (ADH) AI Stock Analysis

• Market Cap: €352.01M
• Dividend Yield: 5.98%
• Average Volume (3M): 453.58K
• Price to Earnings (P/E): 13.6
• Beta (1Y): 2.15
• Revenue Growth: 3.99%
• EPS Growth: -18.35%
• Country: AU
• Employees: N/A
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Specialty Retail
• EPS (TTM): 0.07
• Shares Outstanding: 177,337,050
• 10 Day Avg. Volume: 277,682
• 30 Day Avg. Volume: 453,580
• PEG Ratio: -0.86
• Price to Book (P/B): 1.63
• Price to Sales (P/S): 0.59
• P/FCF Ratio: 5.63
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €2.59
• Price Target Upside: 47.35% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 58 Neutral
• Price Target: AU$2.50 ▲(42.05% Upside)

Adairs Ltd. receives a moderate overall score due to financial challenges, including declining profitability and increased leverage, which are significant risks. The technical analysis indicates bearish momentum, further weighing on the score. However, the stock's valuation is reasonable, with a fair P/E ratio and an attractive dividend yield, providing some support to the overall assessment.

Positive Factors

Revenue Growth

Despite challenges, Adairs continues to grow its revenue, indicating resilience and potential for market expansion in the homewares sector.

Gross Profit Margin Stability

Stable gross margins suggest effective cost management, allowing Adairs to maintain profitability despite external pressures.

Cash Generation Efficiency

Strong cash generation relative to net income indicates efficient operations, providing financial flexibility for future investments.

Negative Factors

Declining Profitability

Decreasing net profit margins highlight challenges in maintaining profitability, potentially impacting long-term financial health.

Increased Leverage

Higher leverage can strain financial flexibility and increase risk, especially if earnings do not improve to support debt levels.

Cash Flow Strain

Negative free cash flow growth indicates challenges in cash generation, potentially limiting the company's ability to fund operations and growth.

Adairs Ltd. Business Overview & Revenue Model

Company Description

Adairs Limited operates as a specialty retailer of home decoration and furnishing products in Australia and New Zealand. It operates through three segments: Adairs, Mocka and Focus. The company offers bedroom products, such as bedlinen, bedding, and bedroom furniture and accessories; bathroom products, consisting of towels, bath mats, bathrobes and slippers, bathroom accessories, and laundry and home care products; furniture products, such as bedroom, office, living room, and kids furniture; homewares comprising home styling, home care and gifting, pets, and kitchen products; kid's products, including kids bedlinen, bedding, décor, bathroom, furniture, toys, and nursery; as well as gifting products. It sells its products under various brands and through online stores. The company was formerly known as Home & Decor Holdings Pty Ltd and changed its name to Adairs Limited in May 2015. Adairs Limited was founded in 1918 and is based in Scoresby, Australia.

How the Company Makes Money

Adairs generates revenue primarily through the sale of its homewares and textiles products, which are available in physical stores and online. The company employs a multi-channel retail strategy that includes direct sales through its branded stores and its website. Key revenue streams include product sales from bedding, furniture, and home accessories. Additionally, Adairs benefits from seasonal promotions and sales events that drive traffic and increase sales volume. The company may also engage in partnerships with suppliers and designers to create exclusive collections, enhancing its product offerings and attracting more customers, thus contributing to its overall earnings.

Adairs Ltd. Financial Statement Overview

Summary

Adairs Ltd. faces challenges with declining profitability and increased leverage, which could pose risks if not addressed. While revenue growth is positive, margins have compressed, impacting overall profitability. The balance sheet shows increased debt levels, which could pressure financial flexibility. Cash flow generation is under strain, but the company maintains a reasonable conversion of net income to cash. Overall, Adairs Ltd. needs to focus on improving operational efficiency and managing leverage to enhance financial stability.

Income Statement

Adairs Ltd. shows moderate revenue growth with a 2.6% increase in the latest year, but this is a slowdown compared to previous years. Gross profit margin remains stable at around 47%, indicating consistent cost management. However, net profit margin has decreased to 4.2%, reflecting pressure on profitability. EBIT and EBITDA margins have also declined, suggesting challenges in operational efficiency.

Balance Sheet

The company's debt-to-equity ratio has increased to 1.39, indicating higher leverage and potential risk if earnings do not improve. Return on equity has decreased to 11.4%, showing reduced efficiency in generating profits from shareholders' equity. The equity ratio remains stable, suggesting a balanced asset structure.

Cash Flow

Free cash flow growth is negative, indicating challenges in generating cash from operations. The operating cash flow to net income ratio is 0.53, showing moderate cash conversion efficiency. The free cash flow to net income ratio is relatively strong at 0.83, suggesting good cash generation relative to net income despite recent declines.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	618.09M	618.09M	594.36M	621.34M	564.48M	499.76M
Gross Profit	198.53M	289.30M	282.20M	120.12M	148.05M	157.85M
EBITDA	94.35M	102.36M	126.56M	132.05M	118.91M	150.48M
Net Income	25.68M	25.68M	31.09M	37.84M	44.89M	63.74M
Balance Sheet
Total Assets	655.95M	655.95M	610.50M	595.95M	627.46M	414.83M
Cash, Cash Equivalents and Short-Term Investments	8.43M	8.43M	12.87M	25.90M	26.07M	25.97M
Total Debt	312.44M	312.44M	275.90M	279.86M	307.19M	107.19M
Total Liabilities	430.77M	430.77M	387.33M	393.72M	429.57M	250.17M
Stockholders Equity	225.17M	225.17M	223.16M	202.22M	197.88M	164.66M
Cash Flow
Free Cash Flow	65.25M	65.25M	66.27M	96.07M	52.16M	105.52M
Operating Cash Flow	78.69M	78.69M	93.68M	108.40M	61.17M	116.87M
Investing Cash Flow	-13.45M	-13.45M	-27.41M	-12.32M	-108.16M	-11.35M
Financing Cash Flow	-69.66M	-69.66M	-79.24M	-96.48M	47.49M	-103.47M

Adairs Ltd. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.76
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:ADH, the sentiment is Negative. The current price of 1.76 is below the 20-day moving average (MA) of 1.84, below the 50-day MA of 2.08, and below the 200-day MA of 2.26, indicating a bearish trend. The MACD of -0.07 indicates Negative momentum. The RSI at 35.32 is Neutral, neither overbought nor oversold. The STOCH value of 26.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:ADH.

Adairs Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DSK	66 Neutral	AU$55.73M	12.66	12.71%	8.97%	8.39%	3.21%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
NCK	59 Neutral	AU$2.15B	37.27	21.99%	2.81%	5.79%	-31.70%
ADH	58 Neutral	€352.01M	13.59	11.70%	5.98%	3.99%	-18.35%
BBN	56 Neutral	AU$371.00M	38.76	8.94%	―	4.72%	465.60%
BLX	55 Neutral	AU$642.16M	21.69	16.86%	2.90%	1.89%	-3.30%
TPW	54 Neutral	AU$2.46B	214.71	8.81%	―	20.66%	543.24%

Adairs Ltd. Corporate Events

Adairs Limited Announces CFO Transition

Adairs Limited announced the departure of its Group Chief Financial Officer, Ashley Gardner, who will leave to pursue a new opportunity. Gardner has been instrumental in strengthening the company’s financial and operational foundations and driving its M&A activities. The company will begin searching for a successor to ensure a smooth transition, highlighting the importance of maintaining its strategic growth momentum.

Adairs Ltd. Announces Cessation of Performance Rights

Adairs Ltd. announced the cessation of 1,477,121 performance rights due to the lapse of conditional rights, as the conditions were not met by June 30, 2025. This cessation could impact the company’s financial structure and stakeholder interests, as it reflects on the company’s performance metrics and strategic execution.

Adairs Director Increases Stake with Significant Share Acquisition

Adairs Limited announced a change in the interest of its director, Rachel Kelly, who acquired 32,500 fully paid ordinary shares on the market, valued at $71,065.28. This acquisition reflects a significant personal investment by the director, potentially signaling confidence in the company’s future performance and stability, which may positively influence stakeholder perceptions.

Adairs Limited’s Strategic Renewal and Growth Focus

Adairs Limited’s recent AGM highlighted significant changes in its board and leadership team as part of a strategic renewal program aimed at long-term growth. The company emphasizes ‘co-ordinated co-operation’ among its businesses, focusing on governance, strategy development, and technology investment, including a new ERP system. Despite solid growth in FY25, Adairs acknowledges that its businesses are not yet operating at full potential, but remains confident in the effectiveness of ongoing strategies.

Adairs Limited Announces 2025 AGM Presentation

Adairs Limited has announced the presentation for its 2025 Annual General Meeting, which is scheduled to take place on October 22, 2025. The presentation is to be read in conjunction with the Chair and Group CEO addresses and a trading update, which are being provided separately. This announcement highlights the company’s ongoing communication with stakeholders and its commitment to transparency in its operations.

Adairs Limited Releases 1H FY26 Trading Update and Guidance

Adairs Limited has released its trading update and guidance for the first half of FY26, indicating that sales growth has moderated due to reduced promotional activity. While Mocka continues to perform strongly, Focus on Furniture has experienced slower sales, impacting gross profit margins. The upcoming 10 weeks are crucial, as they account for approximately 55% of the half’s sales, with major sales events expected to influence the final results. The company remains cautiously optimistic about the trading outlook, with all business units well-stocked and prepared for the peak trading period.

Adairs Limited Announces Director’s Share Acquisition

Adairs Limited announced a change in the director’s interest notice, specifically regarding Kiera Grant, a shareholder of KLG Co Pty Ltd. The change involves the acquisition of 2,765 fully paid ordinary shares through the FY25 dividend reinvestment plan, increasing her total holdings to 185,222 shares. This move reflects ongoing shareholder engagement and potential confidence in the company’s financial strategies.

Adairs Ltd. Updates Dividend Distribution Details

Adairs Ltd. has updated its previous announcement regarding the dividend distribution for its ordinary fully paid securities. The update includes the Dividend Reinvestment Plan (DRP) price, which was not specified in the earlier notification. This announcement pertains to the dividend distribution for the six-month period ending on June 29, 2025, with the record date set for September 11, 2025, and the payment date following shortly after. This update is crucial for stakeholders as it provides clarity on the financial returns and reinvestment opportunities available to them.

Adairs Limited Announces 2025 Annual General Meeting Details

Adairs Limited has announced its 2025 Annual General Meeting, which will take place on October 22, 2025, in Melbourne, Victoria. The meeting will be accessible via a live webcast, although online attendees will not be able to vote or participate directly. Shareholders are encouraged to vote or appoint a proxy in advance and can submit questions prior to the meeting.