Adairs has reported a 4.3% dip in sales to $594.4 million and seen its EBIT drop 9.8% to $57.6m amid a financial year that it says shows just how much customers are struggling with the macroeconomic environment and balancing an appetite for product with the financial capacity to shop.

The ASX-listed retailer's audited results for the 53 weeks ended 30 June 2024 showed gross margin improved to 60.3% from 58.6% in FY23, however gross profit decreased 1.2% from FY23 to $282.2 million. Underlying EBITDA was $68.8 million, a decrease of 5% year-on-year, while statutory NPAT was $31.1 million, a decrease of 17.8% from FY23. Adairs achieved sales of $413.4 million, down 4.1% on FY23, a figure attributed to lower customer traffic.

Across the retailer, online sales accounted for 27.7% of total sales, down 1.7% on last year, although conversions were stronger across both online and in-store, it reported. Adairs opened seven new stores, upsized or refurbished six stores, and closed seven smaller stores.

Across its Focus on Furniture group, Adairs reported sales of $129.6 million, down 8.7% on FY23. A stronger performer was the Mocka website, which achieved sales of $51.4 million, up 5.7% on FY23. By re-establishing Mocka’s foundations across the last two years, this business is now in a position to drive growth in its existing channels and explore new opportunities – including wholesale and shop-in-shop trials, which will commence in 1H FY25.

"As we prepared for FY24, we anticipated a more challenging year due to the macroeconomic environment and the impact it was having, and continues to have, on many households," Mark Ronan, Managing Director and CEO of Adairs said. "We focused most on the matters we could control, and have worked hard on cost control, managing gross margin and controlling inventory investment across each of our businesses. I am pleased with how the businesses were managed and the progress made on their key objectives across FY24, with each business now in a stronger position to grow and improve performance in the years ahead."

Group capital expenditure of $27.4 million in FY24 included $12.5 million to acquire the Adairs NDC assets. Group net debt reduced by $10.0 million to $64.1 million.

As to the FY25 outlook, Adairs said the first eight weeks of trade in FY25 have been mixed. The group said work undertaken to manage costs will annualise and support efforts in FY25.

The Board has declared a final fully franked dividend of 7.0 cents per share, taking the total dividend payout for FY24 to 12.0 cents per share. Trading across the mid-year sales period through June and July was strong across all three businesses.