ADH -- Adairs limited
Consumer Discretionary, Consumer Discretionary Distribution & Retail
Adairs Limited (ADH) is a specialty omni-channel retailer of home furnishings in Australia and New Zealand. It has a national footprint of stores across several formats and an online channel. The Group offers a range of home furnishings, furniture, and home decor through three brands: Adairs, Focus on Furniture and Mocka.
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Over the past 5 years, Adairs Limited (ASX: ADH) [Adairs Share Price, Forecast & Financials (ASX:ADH)] has experienced declining profitability and a contracting share price [Simply Wall St], hampered by a heavily discounted homewares market, fluctuating operating margins [Adairs H1 2026 Margin Squeeze Tests Bullish Earnings Growth], and consumer pullback in furniture spending [This ASX retail stock is falling as a $68 million furniture headache bites]. [1]
Financial Highlights
- Profit & Earnings: Earnings per share (EPS) have declined by roughly 6.7% per year over the last 5 years [Simply Wall St]. Trailing twelve-month (TTM) net profit margin has compressed to 3.01% [Adairs Limited (ADH.AX) valuation measures and financial ...], and the company faced a $68 million non-cash impairment in its recent trading update [This ASX retail stock is falling as a $68 million furniture headache bites]. [1, 2, 3]
- Debt: The company reported total debt of approximately $290 million against shareholder equity, resulting in a Total Debt to Equity ratio of 125.35% (though long-term borrowings and net debt sit lower, hovering around $53.6 million) [Adairs Limited (ADH.AX) valuation measures and financial ...]. Interest coverage remains tight at 2.4x [Adairs (ADH) Balance Sheet & Financial Health Metrics]. [1, 2, 3, 4, 5]
- Return on Equity (ROE): The current ROE is at 8.17% [Adairs Limited (ADH.AX) valuation measures and financial ...], which has trended downwards as macroeconomic pressures and increased operational costs [Adairs Limited (ASX:ADH) - Announcements - Intelligent Investor] squeeze traditional retail margins. [1, 2, 3, 4]
- Brand Performance: Adairs and the Focus on Furniture divisions continue to face headwinds, while the online-heavy Mocka brand has been a bright spot, recently posting double-digit sales growth [Adairs Limited (ASX:ADH) - Announcements - Intelligent Investor]. [1]
You can track historical announcements, dividend yields [Adairs Limited (ASX: ADH) - Financials - Intelligent Investor], and up-to-date valuation metrics directly on [Adairs Limited (ADH.AX) valuation measures and financial ...] via Yahoo Finance or the Adairs Investor Centre. [1, 2]
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The mean historical P/E ratio for Adairs Limited (ASX: ADH) over the last 10 years is 10.37, showing that the specialty retailer historically trades at a low-to-moderate valuation multiple.
Analyze Yearly Historical P/E Ratios
| Year | Historical P/E Ratio | Valuation Context & Performance Drivers |
|---|---|---|
| 2025 | 15.69 / 15.80 | Price contraction alongside stabilized earnings pushed the trailing multiple up. |
| 2024 | 10.70 / 11.33 | Subdued consumer spending compressed retail margins. |
| 2023 | 6.86 | Rising interest rates and inflation heavily impacted discretionary retail stocks. |
| 2022 | 6.44 | Profit margins dropped as supply chain costs climbed post-pandemic. |
| 2021 | 7.54 | Record earnings during the home-improvement boom offset by cautious investor outlooks. |
| 2020 | 8.30 | Strong COVID-19 pandemic e-commerce tailwinds boosted profitability. |
| 2019 | 5.94 | Cyclical retail slowdown compressed valuation multiples across the sector. |
| 2018 | 7.84 | Steady brick-and-mortar retail footprint expansion sustained operations. |
| 2017 | 3.97 | Extreme compression due to localized earnings downgrades. |
| 2016 | 8.43 | Early trading years post-IPO showed moderate investor demand. |
Evaluate Long-Term Trends
- Historical Extremes: Outside of standard year-end metrics, Adairs hit its absolute highest quarterly P/E ratio of 24.63 in December 2014 and dropped to its lowest anomalous point of -88.67 during a brief unprofitability phase in June 2015.
- Cyclical Nature: The 10-year trend highlights how sensitive Adairs is to Australian macroeconomic factors like consumer sentiment, housing market activity, and discretionary spending power.
Monitor Current Valuation
As of July 2026, the stock trades at a trailing P/E ratio of ~13.50. This sits slightly above its 10-year historical mean of 10.37, highlighting a modest premium relative to its longer-term baseline. However, the consensus forward P/E ratio is projected significantly lower at ~8.00, reflecting analyst expectations of solid earnings recoveries over the upcoming financial year.
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ROIC Vs WACC
Adairs Limited (Adairs Limited) has a current Return on Invested Capital (ROIC) of approximately 5.32% to 6.33%, which sits below its Weighted Average Cost of Capital (WACC) of roughly 7.80% to 8.90%, reflecting a negative economic spread in recent periods. Complete, aggregated 10-year yearly historical data tracking the exact annual spread between ROIC and WACC for the entire ten-year duration is not compiled as a single continuous public data set. [1, 2, 3, 4, 5]
Current Capital Metrics
- Return on Invested Capital (ROIC): ~5.32% – 6.33% (latest trailing twelve months)
- Weighted Average Cost of Capital (WACC): ~7.80% – 8.90% (latest estimates)
Historical Context and Performance
- 10-Year Profitability Record: Adairs has maintained 10 profitable years out of the past 10 financial years following its listing on the ASX in June 2015. [1, 2]
- Recent Compression: While historical peak periods during the retail boom (such as during COVID-19 retail highs) saw ROIC comfortably exceed WACC, softer retail trading conditions and lower operating margins in recent years have compressed ROIC down to the 5–6% range, falling beneath the prevailing WACC.
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Debt to Equity
Adairs Limited (ASX:ADH) has a recent total debt-to-equity ratio ranging from roughly 28.5% (considering short-term/interest-bearing bank debt of ~A$66M vs. equity of ~A$232M) up to over 100% when lease liabilities under AASB 16 are factored into total debt calculations. [1, 2]
Balance Sheet Overview
- Current Total Debt (MRQ): ~A$290M to A$312M (heavily weighted by lease obligations)
- Current Shareholder Equity (MRQ): ~A$225M to A$231M
Historical Debt-to-Equity Trends
Because definitions of "Debt" vary significantly for retail stocks depending on whether lease liabilities (store leases) are included, exact figures depend on the financial data provider:
- Excluding Lease Liabilities (Interest-bearing borrowings only): Adairs historically maintained a conservative leverage profile, with standard debt-to-equity ratios generally staying well under 40%.
- Including Lease Liabilities (AASB 16 standards adopted around FY2020): Total liabilities and recorded lease liabilities expanded the reported debt base significantly, pushing total debt-to-equity higher (frequently tracking between 100% and 130% in recent reporting periods depending on the exact fiscal close).
- https://stockanalysis.com/quote/asx/ADH/financials/ratios/
- 2026 - 1.25
- 2025 - 1.39
- 2024 - 1.24
- 2023 - 1.39
- 2022 - 1.55
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