I agree, not sure about guidance or if it even matters. In a...

I agree, not sure about guidance or if it even matters. In a retail apocalypse - they’ve navigated hitting the original top line guidance...I don’t think any other predominantly physical retailer has done the same (except maybe Peter Alexander).

Not sure what the market is doing - assuming EBIT margins of around 13% (based on pricing of products which doesn’t seem excessively discounted + commentary that margins were maintained in the last announcement) gives EBIT of 50m. Given JK will go straight to the EBIT line and the commentary that it would be 80% of the wage bill or so, I get an EBIT of around 70m for this FY, which should support dividend resumption this FY.

I am much more interested in what is happening moving forward. I will be looking closely at how the lease liabilities stack up moving forward (I am expecting some improvements) and what the strategy is moving forward.

This is what I am thinking below- it is obviously not in keeping with the rest of the market-

If the federal government announces that Jobkeeper will continue as is until September next week, the exact same bottom line effect will carry through to FY21 plus there is the added kick of a full 52 weeks contribution from Mocka + the margin improvement from the DC makes 80m EBIT pretty achievable for FY21. It is increasingly apparent that the online demographic and channel are new customers to Adairs. More importantly, Adairs is growing its online presence at a rate pretty similar to temple and webster and I estimate that 30% growth is achievable for the next few years in that channel. So by FY22 when all the free kicks are gone- the rental reductions will start flowing through and the online business growing and DC active, with scale I estimate EBIT margins will increase to north of 15%. Assuming stores generate the same sales (very unlikely given past performance) and online continues to grow at 30%pa for Adairs and 15% for Mocka in 2 yrs time, sales will be approx 550m and EBIT should be approximately 80m...

A business with that track record of execution would normally command a PE multiple in the order of 20-30. I think this particular scenario is a probable scenario- there is almost certainly uncaptured upside in developing the online channel in new markets.

Keep wondering what I’ve got wrong but can’t see anything too faulty in my logic.