Adairs: Bad Dream - The consumer slowdown hits home

About the author:

Alexander Mees
Author name:
By Alexander Mees
Job title:
Head of Research
Date posted:
06 June 2023, 6:30 AM

  • The material cut to Adairs’ (ASX:ADH) FY23 guidance demonstrates the sensitivity of earnings to an abrupt slowdown in store traffic. Adairs (ADH) is not the only company that will be affected by the apparent capitulation of the consumer, but the highly discretionary nature of the homewares category amplifies the risk. We have lowered our estimates to reflect the deterioration in the outlook and have taken the view that it’s going to be tough next year too.
  • Given the volatility and unpredictability of near-term earnings, we retain a Hold rating and, despite the undeniable appeal of a 9% dividend yield, have reduced our target price to (login to view).

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