Ann: ADH - Trading Update, page-34

Double ouch!!
I know the Chairman and this market update seems incredibly like the Chairman who err's on the side of total transparency and keeping the market informed. (big tick)

To sum up.
a. Sales were going great until 3 weeks ago when like for like dropped to zero.
b. LFL still within guidance and overall sales growth achieved +8% versus FY'17 (tick)
c. Year end stores now 165 versus previous f/cast 170 (X)
d. Gross Margin 59% versus 61% this drop was hinted at due to lower USD exchange rate (=)
e. Expenses up $14.7m +9.5% on FY'17 (XXXXXXXXXX)
The distribution issues are a big issue which is not new and management have not fixed as promised. This would have been known well before today. (XXXXXXXXXXXX)
f. Debt /Equity ratio is likely to be between 12-14% (big tick)
g. Dividends to be maintained. 14.5cents grossed up gives a gross yield of 14.3%

So the key issues for investors are:
Will sales struggle or is the last 3 weeks just a blip?
Can management fix the distribution overload?

If you are positive about the 2 key issues then Adairs is a bargain
If you are negative about the 2 key issues Adairs will likely fall further and then probably trade in a narrower channel until customers have more money in their pocket.(roll on tax cuts and lower interest rates)

Buy sentiment remains unchanged for me.

Cheers................Daicosisgod