Spending a mind numbing amount of time at home, as a locked down Victorian is wont to do sends you a bit loopy. It also might make that slightly squeaky dining chair drive you insane, or make you despise that old threadbare linen set you’ve had for years.
Aussies have been feathering their nests with new furnishings to turn their space into a haven free of pandemic qualms for work and play.
Australian retail group Adairs Limited (ASX: ADH) and their subsidiary company, Mocka have been providing for stylish Aussies in need of new couch cushions and, enjoying the uptick in online sales brought about by the pandemic.
There really is nothing like the thrill of a late night home decor purchase which you get to relive all over again when it arrives at your doorstep.
In light of us spending more on vases and less on vino (trendy wine bar down the street, I miss you) Adairs is bringing forward and finalising the settlement of the deferred consideration component of their most recent acquisition, Mocka.
Since the original acquisition in 2019, Mocka, a pure-play online retailer selling furniture and home decor has performed well, delivering a 44% increase in sales for H1 FY21. In the same period, the recorded EBITDA was $7.2 million, an increase of over 97% on the preceding year.
Adairs originally intended to pay 35% of the total sale in September 2021 and a further 15% in September 2022. The revised agreement will now see Mocka founders paid $45 million in September 2021, bringing the total acquisition spend to $95 million, equivalent to seven times Mocka’s FY21 forecast EBIT.
Managing Director and CEO of Adairs, Mark Ronan commented on the early settlement, saying: “This is a positive development for Adairs. Mocka has performed ahead of the expectations we had of the business when we acquired it in December 2019. Since then, our understanding of and confidence in the potential for the business has continued to develop, especially the scope for substantial further growth in Australia.
“The early settlement of the deferred consideration enables the business to continue to invest in the short-term to realise the long-term potential that is beyond the time horizon of the founders. The total consideration paid for the business represents excellent value for Adairs shareholders. We are both ambitious for and confident in the long-term success of Mocka.”
A new CEO for Mocka will be appointed and announced when FY21 results are released in August.
Despite lockdowns forcing store closures for 45% of total 1H FY21 trading days during the height of the pandemic in Melbourne, Adairs sales increased. Online sales growth went from 19% to 37% and helped to offset the 31.3% loss from Adairs stores in metro Melbourne. However, store sales still increased from $146 million in 1H FY20 to $152 million in 1H FY21. Total group sales across online, in store and via Mocka were up by 34.8% for the reporting period.