Buyers Queued Up, page-18

One of Australia’s best retailer’s, Brett Blundy sits on the board and controls just under 20% of the capital. Blundy controls Lovisa (LOV) which is performing spectacularly and has no debt. He also established Bra’s and Thing’s and Sanity Records. I think he may have a tilt or if he doesn’t then any other offers would have to be a a high price to get him to exit Adairs.

Secondly another director Trent Peterson, who represents Catalyst Private Equity has been buying up shares in his own name so he is a strong believer in the value of ADH.

My view is that ADH has built a great business and leads its category. Online sales represents more than 15% of total sales and is growing well. It has a fantastic loyalty program whereby loyalty members spend more per transaction than non members. When it reports tomorrow you will see a much lower debt to equity ratio below 20% and possibly as low as 15%. It has class leading LFL sales growth and generates a high gross margin.
It’s only issue is logistics and under the right owner with better logistics it could generate massive cost benefits. And all of this at a time when consumer spending is weak. Just imagine the sales and profit growth when consumer sentiment turns around? Adair’s is a very attractive T/O target IMHO.

Cheers......Daicosigod