Azzet reports on four ASX stocks with notable trading updates today.
Adairs tanks on messy market update
Shares in Adairs (ASX: ADH) tumbled by around 18.5% at the open after the furniture retailer gave a convoluted market update that begged investors' patience to understand.
The company – which operates a chain of nearly 200 stores across Australia and also owns the Focus on Furniture and online-only brand Mocka - expects earnings for FY25 to land between $53.5 million and $57 million, down from $57.6 million the year before.
Despite a material decline in underlying earnings from Focus on Furniture, management expects the company’s Adairs and Mocka businesses to deliver record sales in FY25 at $614-618 million up 9% from $594.4 million in FY24.
However, management also told the market that delivering heightened sales within a highly competitive market has required “elevated promotional activity” - which together with a weaker AUD (net of hedging) compared to the prior year – means margins and earnings have taken a hit.
While management did not provide greater guidance on margin expectations, gross margins for FY24 were around 60%.
At the segment level, Focus on Furniture's sales are expected to fall by 7% and its earnings are expected to decline by up to 35.9%.
While the flagship Adairs brand is expected to deliver sales growth of 9.2% for the year and underlying earnings growth of 21%, the company's online business, Mocka, is on track to deliver a 14.1% increase in sales for the year and an 18.5% jump in year-on-year earnings.
Meanwhile, in NZ, the re-platforming of the website and a renewed focus on enhancing the product range have contributed to a return to positive sales growth in Q4.
Putting a brave face on today’s update, the company told the market that:
“Management is evolving the positioning and execution capability of the business alongside the national store roll-out program, which is expected to accelerate in FY26.”
“Under Adairs’ new leadership, significant changes are being implemented across the business, designed to reset the foundations for long-term growth.”
Back in April the homewares retailer named interim chair Trent Peterson as its new permanent chair, and Rachel Kelly as an independent non-executive director.
Earlier in the year former Country Road boss Elle Roseby started as Adairs' chief executive in January, following the resignation of Mark Ronan last September.
As part of a strategic shift, Adairs recently moved away from a third-party logistics (3PL) model to take up full ownership of its supply chain.
Justin Dowling, general manager of supply chain at Adairs noted that the decision to bring the supply chain in-house was “driven by our desire for greater operational control and the ability to better serve our customers”.
All in all, the market appears to have over-reacted to today’s update, which may explain why buyers were outnumbering sellers heading into lunch.
Adair’s has a market cap of $319 million; the share price is down 6% over one year and down 33% year to date.
The stock appears to be in a strong bullish trend confirmed by multiple indicators.
Consensus is Hold.
Metcash climbs on positive start to new FY
Shares in Metcash (ASX: MTS) were up around 4% at the open after the supermarket wholesaler posted a mixed, albeit encouraging market update today.
The market appears to have looked beyond some ordinary numbers delivered by its hardware and liquor divisions and focused on what appears to be a positive start to FY26 for the overall group.
First, the group’s FY25 underlying net profit fell 2.4% to $275.5 million but still managed to come in above market expectations.
Statutory profit after tax was up 10.1% to $283.3 million - which included a $15 million gain from the reversal of a previously impaired loan – and also managed to beat analyst expectations of $269.3 million.
But despite a strong performance in its core food business - up 11% in the year to April 30, with earnings up 18% - illegal trade took its toll on tobacco sales, down 20%.
However, if tobacco sales were stripped out, Metcash’s – which supplies IGA supermarkets - sales growth would have come in at double that rate.
Other key financials announced today include:
- Group revenue increased 8.9% to $17.3 billion and 7.2% to $19.5 billion including charge-through.
- Group underlying earnings increased by 2.3% to $507.8 million.
- Underlying EPS 25.1 cps, Statutory EPS 25.9 cps.
- Operating cash flow increased 11.7% to $539 million – lifted 3 year average CRR3 guidance
Underscoring management’s note to the market today, they were clear signals that FY26 is shaping up to be a strong one, with group revenue for the first 7 weeks up 4.7%.
Total group sales increased by 4.7% and excluding Superior Foods and tobacco are up 2.7%.
“Metcash remains well positioned with the plans, platform, capabilities and diverse business portfolio for future growth and success,” the company said.
The company will pay a final dividend of 9.5 cents per share, bringing total dividends for the year to 18.0 cents per share, fully franked.
Metcash has a market cap of $4.2 billion; shares are up 1.46% over one year and 23% year to date.
The stock appears to be in a medium-term rally confirmed by multiple indicators.
Consensus is Moderate Buy.
PointsBet trades flat after rejecting Betr offer
Shares in PointsBet (ASX: PBH) were marginally higher at the open after the takeover target told the market that shareholders chose to reject the offer the highly contentious offer presented by suitor Betr Entertainment’s (ASX: BBT).
Revelations that there was 90% support for Japanese bidder MIXI’s offer saw shares in Betr fall by around 13% at the open.
In a market update today, PointsBet reiterated what it had concluded last week:
“PointsBet believes that Betr’s assessment of synergies and therefore the implied value of their scrip is materially overstated.”
Given that PointsBet and Betr are the largest Australian competitors facing stiff competition from dominant local bookmaker Tabcorp and global giants Sportsbet and Entain – Betr has argued that there are significant synergies to be gained from a quick merger with PointsBet.
However, Betr is yet to formally disclose the precise formal terms of its potential takeover offer.
But based on PointsBet’s numbers, Betr’s offer has an implied value of $1.05 per share, well below MIXI’s $1.20 cash deal.
Meanwhile, MIXI has agreed to make a takeover offer once it’s clear on Wednesday that the Betr offer has failed to get the requisite majority.
PointsBet has a market cap of $396 million; its shares are up 148% in one year and up 19.50% year to date.
The stock is in a strong bullish trend confirmed by multiple indicators.
Consensus is Strong Buy.
Bet-Entertainment has a market cap of $287 million; the share price is up 64% in one year and down 11% in the last week.
The stock shares appear to be in a downtrend confirmed within multiple periods.
Consensus is Strong Buy.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
