Fabric and home crafts chain, Adairs has ruled out the need for a capital raising and will start to slowly reopen stores from this Thursday after reporting a 37% drop in total sales during its store closures over the past 5 weeks.
In a trading update on Monday, Adairs said while total sales had significantly declined, online sales had grown 221% over the period, with 30% of growth coming from customers who had not previously shopped at the retailer.
“Adairs online sales for the 9 months to March 2020 represented approximately 20% of the total sales of the Adairs business,” the company said on Monday.
Recently acquired NZ online furniture and homewares retailer Mocka Australia also saw strong sales growth, up 151% for the period.
“Mocka New Zealand recommenced operations on 28 April with strong sales observed,” Adairs said in the update.
Adairs’ physical stores have been shut since March 27.
Directors said on Monday that the company’s balance sheet and liquidity remain strong, with significant headroom within banking covenants.
“We do not currently see a need for additional capital given our liquidity, sales levels, demonstrated ability to manage costs, and the government assistance programs.
“As at 4 May the Company has cash on hand of $41 million, net debt of $43 million and undrawn debt facilities of $12.5 million, noting that the April rent for the period whilst stores were closed has not been paid,” the statement said.
Despite these assurances, the shares dipped 3.9% to $1.47.
Retailers are expected to begin slowly reopening stores across the country from May 11, a date which had been picked by the government as the beginning of the easing of some social distancing measures.
Myer and Premier Investments chains are expected to start re-opening next week.
Meanwhile, life remains a battle for the struggling travel group, Flight Centre.
The company told the ASX yesterday that business volumes had plunged to a fraction of their pre-lockdown levels and it is on track to reduce global operating costs to $65 million a month and may be able to do so faster and wring out larger cuts.
Flight Centre had expected cost reductions to cost about $210 million.
However, with global travel effectively banned, total transaction value for bookings is running at about 5%to 10% of normal April levels.
“There has been some ongoing activity in most countries and we are seeing a slight uptick in bookings in countries like China as travel and trading restrictions ease,” managing director Graham Turner said.
“The timeframe for this recovery remains unclear, but we anticipate an increase in activity in countries like Australia as soon as interstate borders reopen, which we expect will happen in the coming months,” he said, adding domestic travel usually makes up half Flight Centre’s leisure sales.
Mr Turner said the fate ofVirgin Australia ‘’will play an important role in this recovery”. Flight Centre has updated its cancellation policy and is now offering a $200 credit to anyone who does not withdraw their money from Flight Centre, but leaves it on file for future bookings.
It has received a €4.5 million loan from the French government, is using subsidies from JobKeeper, and is eligible for a UK government loan if needed. Flight Centre also expects to sell its Melbourne offices ‘’in the very near future’’ and says it could get up to $60 million from the sale.
The ACCC confirmed on Sunday that it had forced Flight Centre to change its refunds fee policy with the threat of court action if the change wasn’t made.
The shares fell 6.3% to $9.42.
