@vivRookiedo you want to have a crack at what your expectations are, what objective information has led to your expectations and what your targets might be? Might stimulate more worthwhile discussion that speculating upon what others might or might not do...
My thesis is quite simple.
1. Adairs has a large and growing, highly profitable online operation
2. Adairs is taking huge amounts of market share from competitors:
3. Adairs has a highly profitable store operation
4. There is high visibility on predictable earnings growth, due to:
- negative leasing spreads (landlords) and Adairs' lease durations (only homemaker stores are long-let currently)
- more stores
- online growth
- reduced CODB with national DC
- proven strategy of upsizing from conventional to homemaker (with runway to boot), plus expanding from core (linen) to expansion (home furnishing) categories
5. There is significant unrecognised pricing power ,which ultimately reflects great product design that resonates with customers and an agile design team (look at comparative gross and net margins)
6. The fundamental strategy of a captured customer base and expanding categories into that customer is:
(a) intelligent (my opinion only)
(b) working
7. Management and board are aligned with shareholders- both with significant % ownership as well as very little dilution over 5yrs since listing (mainly also for Mocka, which must be close to the best if not best M&A deal on the ASX over the last 5 years)
8. (7) is unlikely to change because the governance structures and incentives appear to be well thought out and properly incentivised for long-term wealth creation
9. Given all of the above, I think the logical conclusion that is also under recognised by the market is that this is a recipe for global success and online distribution significantly decreases the risks associated with international expansion. Given that Adairs and linen lovers have already been applied for trademarks in the US (Adairs in Dec 2019 and linen lovers in June 2020) it seems probable that they will try something when the time is right. As to whether there will be actual success, the frequency requests for product from international customers on social media suggest to me that there is unmet demand in some of these geographies (particular US, Canada)
10. On just about every valuation measure that you can think of, Adairs benchmarks very favourably (except maybe P/B- but that ship has sailed) on both an absolute and relative basis.
(20min delay)