Adairs to repay $6.1 million in JobKeeper payments after profits jump 233%

Bedding retailer Adairs has become the latest public company to declare it will return JobKeeper payments to the federal government, after it recorded a huge increase in net profits in the first half of the 2021 financial year.

In its half-yearly results, released on Tuesday morning, Adairs revealed its net profits increased by 233% to $43.8 million for the six-month period, while underlying earnings before interest and tax (EBIT), including JobKeeper amounts, were $66.3 million. Excluding JobKeeper, EBIT was $60.2 million, an increase of 166%.

The retailer said based on this performance, the board decided it is “appropriate” to repay $6.1 million in JobKeeper subsidies received during the six months.

In doing so, it joins the likes of Toyota, Super Retail Group, Iluka Resources and Domino’s in deciding to return the government-provided wage subsidies.

Last week, retailer Nick Scali also said it would return some of the JobKeeper amounts it received in the current financial year, backtracking on an earlier decision to hold on to the payments.

However, Adairs is not returning the full amount of JobKeeper payments it has received since the start of the program, including another $4.6 million received during the first half of the 2021 financial year for employees who were either not working or who did not work enough hours to be paid more than the JobKeeper amount.

Adairs also received $11.3 million in JobKeeper payments during the 2020 financial year.

The retailer’s group sales increased by 34.8% for the period, to $243 million, while online sales jumped by 163% to reach $90.2 million.

Online sales now account for 37% of group sales, which compares to 18% in the previous year.

Adairs managing director and chief executive Mark Ronan said the retailer’s strong results were achieved despite supply chain disruptions, national store lockdowns that saw most employees stood down, and the extended lockdown in Victoria where Adairs stores in greater Melbourne were closed for 82 trading days.

Adairs’ results have been fuelled by increased interest in home furnishings during the pandemic, and the retailer said it expects this trend to continue this year.

However, the company has not provided guidance for its full-year results due to “ongoing uncertainty” related to the pandemic, including restrictions that affect store trading and continued stock delays associated with disruptions to international supply chains.