Slowly making my way through the reports.A few things that I...

Slowly making my way through the reports.
A few things that I missed on my first look through.

1. This is very much a recurring revenue stream- in the June quarter, the total repeat customers from 2019 in both online and stores, were higher than the total customers in 2019. The added 100,000 users on the online service in Q4 alone, are extremely likely to continue shopping with Adairs as long as the customer experience is good (which it overwhelmingly is https://www.feefo.com/en-GB/reviews/adairs?withMedia=false&timeFrame=YEAR&displayFeedbackType=PRODUCT, and is only likely to get better once the new DC is operational and the entire Cx is in Adairs control).


2. The leasing arrangements are going to be very favourable- only the homemaker store with high contribution margins have been renewed (you can see on the graph below the correlation between GLA and lease duration).


3. The store and online customers are categorically not the same customers. Given 800K LL members accounting for 75% of sales, the active annual member spend is ~340 and well below the $700+ of the power users of both online and stores. Getting, what I suspect the millenial online shopper in the expansion category into stores to buy linen as they age is going to add an extraordinary amount of value over the coming years.

4. Cashflows
There is a 7.3m increase in tax liability due and only 7m of JK (of 22) has been received. 5.8m in interest on that pile of debt (which by my calculations will stay pretty low even after the substantial dividend) and 2m transaction costs fully expensed. So all else being equal, the 63m in FCF generated in 2020, will be supplemented by a boost of ~23m. This would cover the full inventory re-stocking (15m) + the increase in current tax due (7m) giving a pretty good platform to get a similar FCF result with inventory normalisation, without any additional growth in 2021. Of course, this is almost impossible given that- Mocka gets a full extra 22 weeks, and there has already been a substantial increase in sales for the first 10% of the FY.