Summary
The fund managers believe that Adairs Ltd presents a solid investment opportunity due to its strong market position and consistent revenue growth. In their opinion, the company’s focus on customer experience and product innovation is likely to enhance its competitive edge. They also highlight the potential for expansion into new markets, which could further drive profitability. However, some managers express caution regarding economic uncertainties and their potential impact on consumer spending. Overall, the consensus is that while there are risks, the long-term outlook for Adairs Ltd remains positive, making it a compelling option for investors seeking growth potential.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Source: Trading View
Commentary From The Managers
Ten Cap
31 Aug 2025
$2.60
Summary
- Ten Cap has increased its position in Adairs (ADH), aligning with their strategy focused on domestic cyclicals.
- Both Adairs and its peer demonstrate disciplined cost control.
- They maintain solid balance sheets, which is a positive indicator for stability.
- There is potential for operating leverage as market demand begins to stabilize.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
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Commentary From The Managers
Ten Cap
31 Aug 2025
$2.60
- Ten Cap has increased its position in Adairs (ADH), aligning with their strategy focused on domestic cyclicals.
- Both Adairs and its peer demonstrate disciplined cost control.
- They maintain solid balance sheets, which is a positive indicator for stability.
- There is potential for operating leverage as market demand begins to stabilize.
Summary
Firetrail Investments
30 June 2025
$2.09
- Firetrail Investments notes that Adairs underperformed in June after guiding to FY25 EBIT 10% below expectations.
- The downgrade was attributed to heavy discounting across both Adairs and Focus on Furniture, impacting margins.
- Focus continues to face challenges, particularly in Victoria, although new and refurbished stores are showing improvement.
- Adairs is expected to perform well, with sales projected to grow +9% on 2024 numbers.
- More details on pricing and inventory plans are anticipated at the half-year result.
Summary
Cerutty Macro Fund
30 Apr 2025
$2.36
- Cerutty Macro Fund identifies potential investment opportunities amidst Australia's rate cutting cycle, which began in March.
- Expecting three additional rate cuts by the end of CY25, the Fund seeks exposure to well-valued companies.
- Australia has seen a 2% decline in real disposable income, contrasting with growth in the U.S. and OECD.
- High exposure to variable rate home loans and significant mortgage size increases have impacted Australians' financial resilience.
- Anticipation of a positive 'torque' on disposable incomes as rate cuts provide material financial relief.
- Australian retailers are expected to benefit from forthcoming rate relief, which is not yet fully reflected in valuations.
- The Fund has taken a position in Adairs, a homewares retailer trading at ~10x FY26 earnings.
- Adairs is highly cash generative and management is aligned for near-term success.
- Post-Covid, Adairs is readjusting costs and is expected to see margin improvement as revenues grow.
- Potential for further margin expansion due to U.S. trade war impacts on sourcing costs.
- New CEO Elle Roseby brings extensive experience, having previously doubled revenue and quadrupled earnings at Country Road.
- The board has established Long-Term Incentives (LTIs) for management, aligning them with performance beyond market expectations.
- Management's incentive plan vests fully if consensus earnings are beaten by ~25%, indicating a strong commitment to performance.
- With a refreshed leadership, supportive macro tailwinds, and focus on operational efficiency, Adairs is well positioned for future growth.
- Cerutty Macro Fund will continue to monitor Adairs' progress under new leadership, focusing on margins, store rollouts, and the Focus on Furniture division.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who has invested in Adairs Ltd (ASX:ADH)?
Fund managers including Firetrail Investments , Cerutty Macro Fund and Ten Cap have invested in Adairs Ltd (ASX:ADH).
Why have investment managers invested in Adairs Ltd (ASX:ADH)?
Fund managers are investing in Adairs Ltd due to several compelling factors. Firstly, the company is expected to achieve a 9% sales growth in FY25, despite recent challenges with margin pressures from heavy discounting. The anticipated easing of interest rates in Australia is also expected to provide significant relief to consumers, which could boost retail performance overall. Adairs is currently trading at an attractive valuation of approximately 10x FY26 earnings, making it a potentially lucrative investment. Furthermore, the recent appointment of Elle Roseby as CEO, known for her successful track record in retail, aligns management's interests with long-term growth objectives. With a focus on operational efficiency, disciplined cost control, and a solid balance sheet, Adairs is well-positioned to benefit from a recovering consumer environment, making it an appealing choice for fund managers looking for growth in domestic cyclicals.
What happened to Adairs Ltd (ASX:ADH)?
In August 2025, Ten Cap highlighted their investment in Adairs Ltd (ASX: ADH) in a Monthly Report, noting a share price of around $2.60. The fund manager emphasized their strategic focus on domestic cyclicals, citing Adairs' disciplined cost control, strong balance sheet, and potential for operating leverage as demand begins to stabilize. This positive outlook reflects the company's resilience and growth prospects in the current market.