Ann: ADH Acquisition of Focus on Furniture, page-2

Interesting times! More consolidation in the furniture retailing market after Nick Scali's move on Plush a couple of month's ago. Not a surprising move by ADH I guess with furniture being a larger market than Adair's mainstay home furnishings market, and Adairs now having a stake in online furniture with Mocka.

I think ADH may have trumped the NCK deal on valuation grounds. Working on FY2020 numbers (because FY2021 was bloated due to the pandemic effect), Plush EBITDA of $10m is inferior to Focus on Furniture's EBIT of $10.1m in that year with Plush's revenue 7% higher. Hence it would appear that Focus on Furniture is currently more profitable. And ADH will pay net $75m after cash for Focus compared to NCK paying $103m for Plush, so it appears ADH have done well to negotiate this deal.

There's many factors to weigh up no doubt, such as Plush being perhaps a stronger brand name nationally and more established geographically. I also get the feeling Plush was not run as well as what it might have been. Possibly also there may be more synergies available to NCK as they have such a large and long established presence in the furniture industry (suppliers and logistics).

I see ADH makes no forecast about setting its sights on New Zealand with Focus on Furniture, which is a bit surprising since NCK are finding it such a lucrative market to date.

(ps Also own NCK)