Ann: ADH 1H FY2021 Results Announcement, page-43

G’day Hank

Thanks for the notes above.

I was not surprised at the success ADH had in lifting Adairs GM%. The team had started to experiment different discounting strategies and promo cycles about 2+1/2 years ago and it seems it really paid off when COVID came along. The FX tailwind could be significant depending whether competitors pass on the benefit or not. Off setting that though is the increased cost of shipping and getting freight through the Port of Melbourne.

The other thing that surprised me was the churn of Linen Lovers members. They really have to work hard for new sign ups and renewals to get overall member number growth.

Consolidating into the new DC, starting later this year is quite a risk. Having been involved in a few of these I can say they can be hell raising especially if something goes wrong. So I will be watching for evidence of out of stocks and/or the blowing out of online delivery times both telltale signs that the DC project is struggling.

It will be interesting to read what revised targets the analysts publish. My view is that a successful H2 will be the confirmation required for the re rate and possibly a charge up to $6, and that’s a long way from the $0.88 I paid for a fair chunk of ADH shares back in late March.

As an aside Mrs. Daicosisgod went to our local Adairs large format store last week for the first time in almost a year. She remarked that the staff were incredibly helpful and had forgotten what a lovely experience it was to visit a large format Adairs store. And of course she came home with armfuls of product for the new grandchild who is only a few weeks away from delivery.

Cheers and the best of luck......D