Another company to stand out in yesterday’s second day of selling (besides oOH!Media) was Sydney-based homewares and fabric seller Adairs which revealed a big move into the online space via a deal that could cost it more than $95 million in cash and shares.
The company will acquire Mocka, a vertical online retailer of affordable homewares and furniture. While the multiple is not cheap, Morgans notes it is rare to acquire an online business that is profitable and light on capital expenditure.
The second half trading update showed an acceleration in sales, with like-for-like growth of 18% in the year-to-date. Guidance has been upgraded to $44-46.5m in EBIT for FY18, which Morgans notes is the third upgrade this year.
The company’s market update revealed operating dynamics have improved significantly towards the end of FY17, with Morgans pointing out operational profit (EBIT) is now expected to come in at the top-end of guidance range, adding [this is] "an outcome that looked highly unlikely six months ago".