Thank you for standing by, and welcome to the Adairs Limited FY 2022 results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by 1 on your telephone keypad. I would now like to hand the conference over to Mr. Mark Ronan, Managing Director and CEO. Please go ahead. Good morning, everyone, and welcome to the Adairs 2022 financial year results call. Joining me this morning on the call is Ashley Gardner, our CFO, and Jamie Adamson, our Head of Investor Relations. The 2022 financial year has been a year of contrasting halves, with significant lockdowns impacting results across the first half of the year, while the second half saw customers come back to stores in a more normal trading environment. Over the year, the group delivered a record AUD 565 million of sales and EBIT of AUD 76.4 million. Importantly for the group, each brand has made progress on their strategic priorities that will drive the ongoing growth for the group in the years to come. Adairs has continued to build upon the strength of the loyalty program, with more than one million paid-up Linen Lovers at the end of the financial year. We know that loyalty will be a key part of the future for retail brands, and we will continue to invest in this to deliver more personalized experiences for the Adairs Linen Lovers. Adairs also profitably grew the store portfolio with the opening of four new stores and the upsizing of a further 11 stores. These larger stores support the growth in Adairs' product categories, deliver a better shopping experience, and are generally more profitable. Finally, Adairs completed the transition of its multiple warehouses into the National Distribution Center. We expect that this will see significant operating efficiencies, improving both the customer experience and the distribution cost over FY 2023 and beyond. At Mocka, we have spent the year building out the management team to support our growth aspirations for the brand. While the year did not deliver the results we wanted, we have a clear strategy and a team with the bandwidth and capability to deliver the full potential of Mocka over the years to come. The acquisition of Focus on Furniture has added another strong brand to our portfolio, increasing the exposure of the group to the bulky furniture category. With a significant opportunity to grow the store portfolio across Australia and strong sales momentum within the brand, we look forward to seeing Focus become a national furniture retailer over the next three to five years. As part of the annual report, we've delivered our inaugural sustainability report outlining the progress made on our commitments to sustainability. When we think about sustainability, we see it as the impact we have on people, product, and the planet. Our efforts to date have seen us focus heavily on our supply chain, in particular, auditing it for modern slavery and the reduction of plastic packaging used within the businesses while investing in the development of our people. Across the year, we have also increased our measurement of waste and emissions to set benchmarks upon which we can continue to improve. Committed to the 40:40 Vision initiative, which will see the board and executive leadership team having not less than 40% of each gender by 2027. Continue to support the great work of Orange Sky, and have made a commitment to removing plastic bags from our stores in the first half of FY 2023. Importantly, the group sees sustainability as a strategic imperative, and we continue to build new ways of working that ensure our people, products, and planet initiatives are continually considered as part of our day-to-day actions. If I move to slide three of our investor presentation, you'll see that with the addition of Focus on Furniture during the year, we've built a portfolio of brands specializing in homewares that we are confident can continue to deliver annual sales growth as we have seen over the years prior. Our brands are product-led, with each business focusing on delivering great product to customers' homes at a good value price point. Through the strength of our in-house exclusively designed products delivered through our vertically integrated supply chain, continuing to build the awareness of our brands and a commitment to an omni-channel model that allows us to support customers however they choose to shop, we are well-placed to double the size of the business to over AUD 1 billion in revenue over the next five years. I will now hand over to Ash to walk through the FY 2022 financial results in more detail. Thanks, Mark, and good morning, everyone. The group reported an underlying EBIT of AUD 76.4 million, approximately 2% below FY 2021. Adairs achieved an EBIT of AUD 55.5 million, down on FY 2021, but remaining well ahead of the pre-COVID levels. While Mocka's result of AUD 3.7 million was disappointing. Focus on Furniture contributed AUD 17.2 million to the seven months of ownership by Adairs, which was well ahead of plan. Total sales for the year of AUD 564.5 million were up 12.9% and included AUD 82 million of sales from Focus on Furniture for the seven months. While 16% or over 10,000 store trading days were lost in the first half due to government-mandated store closures. Like-for-like sales for the group, excluding Focus, were down 2%, cycling the record 16.5% like-for-like growth achieved in FY21. Online sales contributed almost 35% of total sales, reflecting the omni-channel strength of the group. Adairs sales were only 4.8% down on last year, despite the lost store trading days, with customers continuing to shop across both channels. Mocka delivered total sales of AUD 64 million, up 6.5% on the prior year, albeit sales in the second half were down 7.6% as a result of the local supply chain disruptions and some product issues that led to adverse customer feedback. Focus sales of AUD 82 million were pleasing and well ahead of plan, and the business closed the year in a strong position with an open order book of AUD 18.5 million. Group gross margin of 59.6% was affected by the higher contribution from Mocka and Focus, with both businesses operating at lower gross margins than Adairs, while all businesses were affected by the higher cost of sea freight. Adairs delivered a trading gross margin of 63.2%. 350 basis points down on last year, but 170 basis points ahead of FY 2020. The result was in line with our objectives of retaining a large portion of the gross margin gains achieved in FY 2021, with underlying trading margin well ahead of FY 2020, but partially offset by the elevated sea freight costs. Mocka's gross margin of 45.3% was impacted by refunds following the local supply chain disruptions and increased costs of sea freight, which Mocka is more sensitive to given the slower price points and initial margins. In addition, following a review of the Mocka merchandise strategy, high clearance activity was undertaken in the second half, and a one-off provision of AUD 1.2 million was recognized against inventory that is not considered a part of the range moving forward. Costs of doing business across the business were affected by risk management decisions taken during the first half to manage COVID uncertainty and our ongoing investment in our teams throughout the year. At Adairs, we continue to support the Adairs store teams during the store closure periods in the first half to ensure they'll be available when the stores reopen for the peak trading period. In addition, the transition to the new national distribution center was slowed down, and an existing DC was retained by the Adairs business to reduce the concentration of risk and ensure stock would continue to flow to stores and online customers during this period of uncertainty. This, combined with a slower-than-planned ramp-up of operations at the new DC, added considerable cost to the business, which we don't see recurring moving forward. Mocka experienced a substantial increase in costs to address the local supply chain issues and continued to invest in the team to build the capability to realize the potential for the business over time. Our balance sheet at the end of the year is in good shape. Inventory levels remain high across all three businesses, reflecting early deliveries of stock to manage supply chain instability. Other than the clearance stock action within Mocka, inventory quality is good and in line with what we need for the start of the new year. Previously advised, we don't see a need for inventory to continue to rise. However, the pull-forward strategy is likely to remain in place until there are sustained signs of global supply chain stability returning. The group closed the year with net debt of AUD 93.2 million after funding the acquisition of Focus and the final earn-out payments for Mocka in the first half. We continue to operate with manageable levels of leverage and retain significant covenant headroom. A final dividend of AUD 0.10 per share was declared by the board, which brings the total dividend for FY 2022 to AUD 0.18 per share. The dividend reinvestment plan remains active for the final dividend. Back to you, Mark. Thanks, Ash. Building on my comments from earlier, we have provided guidance for the FY 2023 year. We are confident with where the brands and therefore the group is positioned to navigate the emerging macro headwinds. By focusing on the middle market with strong value propositions, we are well-placed to capture those customers who are looking to make updates or changes to their homes without needing to make a significant investment, as highlighted by our relatively lower average item prices. This is supported by our commitment to omni-channel retailing that enables us to service all customers regardless of how they choose to shop, providing them with a complete customer experience, and importantly, providing the group access to the total addressable market. Just as importantly, our large and loyal customer base gives us the ability to directly communicate with our customers as we showcase new ranges and offers, providing them a compelling reason to shop. With the full-year contribution from Focus, an improved result from Mocka, and the opening and upsizing of Adairs and Focus stores, we expect to continue to grow sales to between AUD 625 million and AUD 665 million, delivering EBIT of between AUD 75 million and AUD 85 million. Over the first seven weeks of FY 2023, we've seen sales growth of 3.9% excluding Focus, in line with our guidance and plan. Over this period, we have also seen Focus continue to trade well. Across the group, we continue to see strong total sales growth in retail stores and a reduction in online sales against the significant lockdowns of last year. We expect this to be the case for most of the first half, with our plans and guidance reflecting this more normal trading environment. Before I finish, I'd like to thank a few people. I'd like to thank our large and loyal customer base. Across our group, we get the privilege of being a small part in helping them create a home they love, and our aim every day is to continue to inspire and delight them, and we thank them for their ongoing support. To our teams across Adairs, Mocka, and Focus, I'd like to thank all of the team members across Australia and New Zealand for their hard work and dedication. The last couple of years have seen a number of challenges well managed by the team, and this puts us in a good position to not only manage the current trading conditions, but more importantly enables us to capitalize on the new and ever-evolving retail environment. I'll now hand over for questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up your handset to ask your question. Your first question comes from Alex Mead from Morgan Stanley. Please go ahead. Thank you. Good morning, gentlemen. Just a couple of questions from me, starting with the NDC. Just wondering if you could remind us what the quantification of the transitional costs were that you incurred in FY 2022 that won't recur into FY 2023, please. There's two parts to that, Alex. One is the actual transition costs which we excluded from underlying earnings. Then the amounts that were included in our underlying earnings that relate to the retention of the old DC and the ramp-up was around AUD 6 million. Excellent. Is it fair to assume that the NDC is now fully ramped up and back at its operating efficiency level? We've got everything in there. It's not fully ramped up yet. We'll continue to work through that over the next 12 months. I think realistically, we won't see the full efficiency benefits from a cost perspective flow through until sort of FY 2024. From a service perspective, which is our primary focus, we're seeing significant improvements there. Great. Thanks. Just on pricing, just wondering what you're experiencing out there in terms of are your competitors being aggressive with their promotions and their discounting, especially around that end of financial year sales period, which is so important for Focus in particular? Yeah, I think we are seeing plenty out there. Funnily enough, I think in the case of Focus, we ran a pretty traditional offer over that period and delivered the results that we expected. We're really happy with the, I guess, the Focus performance over that period. We're probably seeing people go harder in categories that are there for trading, if I'm honest, you know. Most of the competitor set out there ran a longer sale period than perhaps in prior years. We of course continued with our approach of trying to reduce the number of days on sale, which meant we lined them up with last year as opposed to continue to run them for a longer period. I think in the case of Focus, you know, we're seeing the product offering and, I guess, the pricing and promotions resonate with customers, perhaps despite the increased discounting that others might be doing out there. In the case of Adairs, we're comfortable that we continue to play a bit more of a long game and on the margin and are working that through depending on what else is going on in the market at the same time. We're definitely seeing a much higher level of promotions in the Adairs categories versus prior years. In particular, some of the majors out there running some bigger offers. Thanks, Mark. Just finally on cost inflation. Just wondering what your assumptions are in coming to your guidance range around cost inflation, labor and rent, et cetera. We're factored in circa 5%. In terms of labor, if you run circa 5%, if you think the retail award was up 4.7%, we're using that as that's the bulk of our wages are largely attributed to that. We expect that to sort of sit at that, let's call it circa 5% for the wage inflation for the year. In terms of rents, a lot of our rents are on fixed increases. There's not a lot with CPI on them, so we don't need to factor too much of that in which sort of sees us more operating at the 2.5%-3% in line with those that are actually on a CPI lease. We've probably got about 50 or 60 stores to renegotiate this year. We're sitting with, I think last time I checked, 48 stores are either in holdover or come out of lease in the next 12 months. On, as I've said before, I think we'll see a continuing decline in rents in shopping centers, with the exception of, you know, the guys that are particularly good, and those real A-grade centers. For Homemakers, we're probably seeing more like a 3%-5% sort of increase in the rentals, which is largely in line with the leases as they roll out. Overall, I think you can probably factor sort of 3% into the rental line in terms of inflation over the coming year. That's great. Thanks, Mark. I appreciate it. Thanks, Alex Mead. Thank you. Your next question comes from Aryan Norozi from Barrenjoey. Please go ahead. Hi, guys. Just one around your debt and your gearing. Could you please let us know what your covenants are for your facility? Yep. Covenants is the usual package, so fixed charge, leverage and gearing ratio, capital ratio, debt to capital ratio. We've got plenty of headroom. Leverage is obviously the one everyone's focused on. On a growth basis, we're sitting on a leverage ratio of around 1.29, and net of cash, it's under one or around one. You know, the covenant's well in excess of that, so we've got plenty of room. All right. The typical covenant for sort of 2.5-3 times, is it around that range? No, it's not that high, the covenant. Okay. Yep. Perfect. Just in terms of, if you just take the second half of 2022 fiscal 2022 result, can you break down the buckets that were non-recurring versus sort of recurring in terms of costs? So you've obviously had the DC cost, which is AUD 6 million full year. Can you just break down the second half 2022, the extra cost that you incurred, which you won't repeat and are not repeating in fiscal 2023, please. For Adairs, the main cost is that DC cost, which is around sort of AUD 3.5 million-AUD 4 million in H2. That's about it in terms of material non-recurring costs within Adairs. Then obviously, there's the various events that affected Mocka more broadly that we would like to think don't repeat, but that sort of runs across sales margin and costs. Okay. Like the distribution costs for both Adairs and Mocka, so that's the online site as a percentage of sales increased significantly half-on-half. Do we assume that's the new baseline moving forward, for cost- No. No? I think there's a couple of factors that affect that. One is, within Mocka particularly, there was a lot of duplicate delivery charges that were incurred to sort of deal with the supply chain disruptions that we experienced, as well as the returns and other things that I mentioned earlier that affected margin and the stock provisions. For Adairs, I think we'll return to a level that's more the midpoint between FY 2021 and FY 2022. With the DCs now all products operating under one roof, the number of split consignments to customers and so on will reduce. Part of that's offset by increased rates from our carrier partners. You know, we sort of think of those as normal business costs that we need to manage on a day-to-day basis, and are less directly measurable, unlike carrying a whole extra DC over the year. I would expect that Mocka rates will come back, and the Adairs will come back, but they won't come back to the FY 2021 levels. The other thing that affected FY 2021 was the, you know, number of transactions, and the average value of transactions are very different from what it was in FY 2022 with fewer transactions and higher value, and then more transactions at lower value in FY 2022 as the world returned to normal. Yes. Perfect. If I take Mocka in the second half of 2022, obviously loss-making versus sort of the, I think, 17%-19% EBIT margin you guys sort of talked to have talked to historically, how do we think about the progression to that in terms of first half 2023, fiscal 2023 and moving forward, just in terms of how the margin will progress, sort of, to that sort of 17%-19%, if 17%-19% is still reasonable? I think we'll make a good stride in the first half, but we won't be back to 17%-19% in the first half as we have obviously made the investment in the team. We've got a higher CODB flowing through that business. We have seen significant increase in the delivery costs of Mocka as we moved to a partner who will actually deliver it to the customer, which is a net-net positive and I think deliver a much better service. We expect that, you know, first half will probably remain quite suppressed in terms of the 17%-19%. As we hit the second half, we'd like to think that we're pushing that back up towards the middle, you know, before somewhere in the 14%-16%. At the moment, I think the big impact we're seeing there is the sea freight impact on our gross margin percentage as that starts to unwind a little bit, which we're hopeful of seeing in the second half of the year, we'd expect that we can start to head back towards that top end of the range. You know, if we can get it back into the midpoint, you know, 14%-16% in the second half, that's our first stop in moving it back towards those levels. I think at the moment, if we traded at 14-16 and we're growing the top line, we'd be pretty comfortable with that as the business continues to invest in building the capability to reach the levels that we think it's got the opportunity to get to over the coming years. 14%-16%, and then hopeful to get by the second half 2023, that doesn't include any benefit from sort of the sea freight cost improving. If that does improve, then you get the more normalized 17%-19%. Is that right? Yeah, I think if the sea freight improves to the top end of the 14-16, and otherwise we're at the, you know, more towards the bottom end of that. Because we have made a significant investment in team in that business and continue to work through building a process and function that allows us to operate at a greater scale. There's a number of investments we've made, and we've probably still got a few to make, so that are just holding back that EBIT margin over the next 12 months to two years. We should be able to see where the business can go from there. We're probably more like thinking the bottom end of that range to begin with. If sea freight gets better, we'll be more towards the top end. Perfect. Thanks, Guy. No worries. Thank you. Your next question comes from Apoorv Saigal from UBS. Please go ahead. Morning, Mark, Jamie, and Ashley. First question, just on your FY 2023 guidance, specifically on the sales guidance, is it fair to say that you're assuming that like-for-like or per square meter sales for the Core Adairs business to be lower than pre-COVID FY 2019 levels? Like, are you assuming that the macro environment sort of does get a bit tougher in your assessment of guidance? Yeah. We're assuming that the macro environment gets tougher. I don't think we're assuming that the sales fall too low in relation to the GLA number. I think it's probably more reflected in the EBIT guidance versus the sales guidance, and a pullback in online. Got it. Yeah. Online sort of slowing. Maybe then on the gross margin side of things, when I look at the second half result for the core Adairs business, your gross margins after delivery costs are 58.7%. Is that sort of a fair guide of how we should think of gross margins going forward? Like, is that sort of where the natural GMs of this business sit? Or perhaps does it maybe need to step back a bit further going forward? I don't think it steps back further. I think if you think about that number, that as Ash mentioned before, there's some delivery costs in there that we'd expect to come out. If I thought about, who knows what the trading environment looks like in the second half of the year? We're factoring in that, you know, we probably need to be mindful that we might need to drive the business a bit harder. If that's the case, that sort of number allows for that. I wouldn't think you'd step it down further, off the back of FY 2023. I think, you know, I would think about it, I operate far more at a gross margin level, before delivery costs. You know, at the moment I think we've retained a bunch of those, and I expect that going into next year, we should see us probably have to be prepared to think about how we give some of that up, if given the cost price inflation we're seeing come through from suppliers, sea freight not stepping back and potentially a slightly more challenging environment. I think if you thought of 58.7% as the margin that you guys are putting in there, I wouldn't be uncomfortable with that. That's about the mark. Okay. That's clear. Just another one. Normally, you split out the trading update by brand and sort of on a two-year stack, or in this case, a three-year stack sort of basis. Just curious as to why, on this occasion, that sort of wasn't disclosed. And if possible, are you able to give some sort of color on how those first half 2023, first seven-week numbers so far compare versus first half 2020 pre-COVID? Well, not off the top of my head. 'Cause I don't sort of pay that much attention. If you think about it, the reason we haven't done it is we were more thinking about it versus last year versus first half 2020. The concept behind that is the first seven weeks last year are such a different trading environment than the one we're operating in now. You know, as I said, you know, in the commentary there, our online businesses are trading down against first half 2022 or the first seven weeks of 2022, which was in line with our plan and our expectations, given stores have reopened and come back relatively strongly. We're seeing, you know, as we've mentioned there, good sales growth out of store and solid results out of our stores, both in Focus and Adairs. The digital sales step back now that customers have the choice and are regularly choosing to go into store. I'll take the question on notice in relation to against first half 2020 and think about that one a bit more. Okay. Thanks, guys. Thank you. Your next question comes from Mark Wade from CLSA. Please go ahead. Good day, guys. Just on the Mark. On the long-term expectations for the Focus brand. I mean, when you acquired that business last year, I think you thought maybe sales would get to about AUD 125 million. The pro forma results this year were AUD 135 million. That's getting a bit closer. Your EBIT is, you've more than doubled those longer-term targets. The question is, are those longer-term targets still the right numbers, or do you think you can actually hold up a bit stronger than initially expected? Look, I think I wouldn't move away from the longer-term targets at this point in time. You know, owned the business seven months, you know, I think a 20% EBIT margin on that business is too high, and will hurt us in scaling, as we start to roll that out. It's very efficient in the way that it operates today. As we need, we will need to put some additional costs in to roll it out more broadly. We had a great gross margin result. The guys have done an amazing job at driving great top-line sales at a really good gross margin. We think there's probably a couple of things in our favor in the first seven months that if we thought about a longer-term, more normal trading environment, there's no doubt, I think Focus is winning by having stock available as opposed to long lead times with some other furniture retailers out there. We're making the most of that environment at the moment. I think as that starts to perhaps normalize a bit, we probably see that EBIT margin step back a little bit. But we do, you know, we said we wanted to get it to AUD 35 million EBIT on AUD 250-300 million of sales, and we think that that's still well within our wheelhouse. I think the question for us is how quickly we can open stores given the homeware space is harder to get those opportunities, and we wanna make sure we're doing the right deals in the right centers rather than just rushing to open stores. One of the things we always think about is being really disciplined on our store opening portfolio. We'll keep working through that. I wouldn't wanna write them off after seven months. Realistically, we haven't opened a store in that time, and opening stores is a big driver of that growth. As we start to roll them out, Mark, you know, I'd like to think that perhaps that might be the case, but let's get a bit more time under our belt and start to open some stores and see where that goes. Understood. On the Mocka, it's come back a long way on the profitability. The sales are up a bit, though. I suppose with some of the clearance activity. Are you still confident, you know, in that damages to the brand is, you know, you can recover from it's not irreparable? You know, I guess it'll come down to how many returned customers and are the new customers put off by it. Yeah. I think it's a good question, though, Mark. What we've wanted to do is solve the underlying operational issues within the business, and make sure that we are in a good place before we really step into a brand recovery piece of work. I expect that we'll be able to roll that out over the first half of 2023. What we're seeing in trade is that customers are prepared to give us another go. Now that we're starting to get the delivery piece right, and we've solved a couple of the product issues that we've had, we're starting to see that kick back into, actually this is pretty good product that's at a pretty good price, and we can actually nail the delivery experience. We start to build the confidence and momentum back into the brand. That's why we sort of see first half us continuing to invest in that process, and second half really should be a place where we start to get some more runway and some more traction on that. You know, I remain confident that I think the product we've got is good. I think it serves a real purpose in the Australian market. You know, I think the team we've got now are really focused, as I said, with a really clear strategy on what matters to our customer, and let's deliver on that. I'm confident. Time will tell. Customers always give you the ultimate answer, but I'm happy that we've got a plan in place. You know, from my perspective, we'll know a lot more in six months and in 12 months as to how well we've done at rebuilding the trust that we've, you know, or the brand damage that we did over the FY 2022 with those, the supply chain issues that impacted the results. Okay. Just lastly, just across the ditch in NZ, has the view on that market moderated? I mean, it sounds like some of the retailers are doing a little bit tougher over there. We heard from Nick Scali this morning. Others are doing a little bit better. What's your view on that market and how prospective it is for expansion across the various brands under the stable? Yeah. New Zealand's tougher. There's no doubt that New Zealand's trading tougher than Australia across Adairs and Mocka. We've certainly seen that the consumer over there step back a bit faster than the Australian consumer has. I think at the moment we're actually just in a matter of, well, let's just pick the right deals. You know, we'll still be looking to open stores and do all those sorts of things in terms of Adairs. Mocka will continue to do what it does. It is actually trading half okay in New Zealand. It's not going up against major lockdowns, so we're getting a better read on how that's trading week to week. It's definitely a more challenging market, NZ than AU at the current time, which just perhaps slows you down in terms of whether you rush to open that store. There's no big drive to open a bunch of stores in a trading environment that's a bit more challenging in the first half. Equally, you know, we haven't seen a lot of opportunities at the moment and, you know, was finally able to go back and actually start to walk centers and see the stores and do all those sorts of things. We'll be a bit more active in that market over the first half 2023, but I wouldn't expect to see too many new stores or changes to our portfolio in that half while we look at the trading environment and we look for the opportunities out there. I guess your buyers are probably a bit excited they can travel overseas as well and go and see some product and pick up some trends from overseas. Yeah. It is a real positive that we've had a number of the team off in May and June, to your point, getting around the world. You know, eventually we'd love to be back into China. We've been working with our suppliers hand in hand. There's a lot of samples moving backwards and forwards from Australia to China at the moment. But yeah, no, there's no doubt that that definitely has created a bit of a spark and, you know, I expect that we start to see some of that real enthusiasm and look and trend start to hit the business, Q2 of this half, so that we start to see some of those changes occur. 'Cause I think, trend has been largely pretty similar for the last 12-18 months, and we're certainly starting to see some of that movement now, which is exciting for Adairs in particular with our fashion focus. Yeah, exactly. Okay. All the best. Thanks, Mark. Thanks, mate. Thank you. Your next question comes from John Hyde from Wilsons. Please go ahead. Good morning, guys. Thanks for taking my questions. Starting with Mocka, how badly did delivery failure hit third quarter? Can you give us some color now on, you know, the sales canceled? Did you have to offer material discounts? On your comment, Mark, about the customer making the final choice about recovery, did you start to see a recovery in the fourth quarter and then for the first seven weeks of 2023? Let me work my way through the three questions, John. Sure. I think Q3 was definitely impacted by ongoing challenges. As I would have said at the February call that we felt like we'd locked it down and we were moving in the right direction with a new delivery partner. We were managing that very tightly and closely. In the end, we made a subsequent change, which impacted ongoing refunds and discounts provided to customers. Q3 was definitely impacted by that. Q4, we had some product issues that impacted our ability to be out there really pushing it. We didn't push it too hard in Q4, generally. What we did see was we solidified the delivery experience, and we started to get the customer feedback that that was now getting back on track, which was important. Obviously in Q1 of FY 2023, as I mentioned before, we're going up against lockdowns in Victoria and New South Wales. We're trading well off the numbers of the prior year, but that was all part of the, you know, reflected in the plan and guidance that we've provided as part of this presentation. I'm looking forward to Q2, where we get a little more normality back into the market and year-on-year and equally from Mocka, that will be going up against a period where we could see what the delivery was impacting us in Q2 last year that obviously then flowed through into Q3. We'll get a much better view as we hit Q2 of the trading performance of the Mocka business overall and the impact perhaps that the delivery issues of last year have resulted in terms of conversion and those sorts of things. What I do find in that digital space is as you get further along, commentary and all of those things get further down pages, right? What we're really focused on in that business is how do we continue to deliver great customer experiences day in, day out now, and as we start to get that as the message coming back through from the customers, that's what people will see in the short term versus where we were obviously this time last year. Yeah. I guess it's important to note that customer base refreshes every 1-3 years as the younger family cycles. Yeah. new families cycle in. That said, given the shorter term, the cycle of the customer, have you given us like some guidance on where, you know, revenue and EBIT might sit for Mocka like you have with Focus on Furniture? Or did you wanna perhaps give us some updated mid-cycle guidance on how you think this business could perform? Yeah, I mean, at the moment what we've seen is obviously in the past we've provided the thought that we should double the size of the Australian business, given the population of Australia versus New Zealand, which sees the business. Yeah. You know, heading towards AUD 150 million of revenue. We don't see that as being unachievable. We don't see the needing to significantly change at the moment. What we need to do is, and if you think about it, we held the top line relatively well, but we blew costs, which really came back to, you know, as we've said, refunding delivery costs, refunding full sales for customers despite them having the inventory. So we went with a customer resolution that was expensive, and that impacted the EBIT significantly. So, you know, I still don't think that 150 million is not a number that we shouldn't be chasing down in this business over the next, you know, three to five years. You know, FY 2022 was disappointing. FY 2023, we start to rebuild that consumer confidence in the brand. As we move into FY 2024, I expect that we should be able to accelerate that. You know, we've always talked about us being an omni-channel retailer, so at some point along the journey, it won't be in the next 12 months, but, you know, we start to think about how does that also play out into a broader strategy, not just pure play online, which obviously helps drive that top line and builds customers' ability to interact with the product and the experience and all of those sorts of things. I think, you know, as we look forward, I still see, you know, comfortably, you know, we should be in AUD 150 million-AUD 200 million in this business as we look forward, you know, three-five years. Great. You both, like you and Ashley talked about operating costs, particularly for staff for Mocka. Do you wanna give us some color on, I mean, how much of the management team maybe was replaced or what you're comfortable talking, you know what I'm getting at there? Like, what's been done there, what you're comfortable talking about and what's top of the list with their KPIs or what's on the agendas when you're catching up with them every week or month or whatever? Well, there's been a large change to the team, which probably reflects the movement of the center of gravity of that business from New Zealand to Australia more so than anything else. Obviously, there are a number of people within the business that have worked closely with the founders that elected to step away once we made the change. As I mentioned in my presentation, we're really comfortable with the team that we're putting together there. Lots of people with good experience, digital, marketing, and building out the capability of that business. As we know, brand awareness is a big part of it, so how do we keep building that out? We've brought in some people that we think have really good prior experience in that space. Obviously, you know, the leadership is now based out of Brisbane, so we've seen a lot of changes. Realistically, when you start to think about KPIs or the KPIs you see in every business, how are we going on sales and margin? In this Mocka more so than even Adairs, given it is a pure play online business, we're looking very heavily at delivered margin and how that plays through. You know, a range review of Mocka is very different to a range review of Adairs, where I'm talking to the guys in here about gross margin. At Adairs, I'm thinking about gross margin and I factor in the delivery costs and I can work that out. Whereas at Mocka, because we are pure play, we're very much right, what are the size of the boxes? How does that knock down? Is that the best way we can run it as KD? Where does that end up? Are we getting the delivered margin we need? And how do we make sure we maximize that? The real focus for that business at the moment is really on two core things. How do we make sure we're delivering great product and continuing to build our product range and being really focused on what that looks like? Manage inventory probably a little more tightly than we have in the past, such that we don't end up with, you know, things like the range that we've had to take the write-off of or the write-down on at the end of the financial year. How do we make sure we maximize that delivered margin in that space? With that, the delivery experience for the customer. Like, there's no point getting a better delivered margin if we find we lose stock all around Australia and don't give it to the customer. Getting the balance right between a good delivery experience and the price we're prepared to pay for that is crucial. When I think about the conversations that we have at Mocka, we're not much more on that. Obviously, you know, the third element of that is traffic. You know, how do we get traffic and conversion? I mean, it's no different to any business really, but we're trying to keep Mocka in particular. It's a pretty simple business. As retailers, we all get good at complicating things, but how do we get good products, get the right margin, and then make sure we're putting it in front of the right people? All of our KPIs are based on sort of those three big rocks. Yeah. That, that'll make sense. Last one from me. The order bank for Focus, how does that work? I thought it was you're gonna be holding inventory, not taking orders, so to speak. I mean, can you give me an understanding of how many weeks volume or sales this would represent, please? That probably represents sort of circa four-five weeks of sales in terms of the order book that we've got. A lot of that is working with customers to be fair, John. You know, a customer says, "I'm ready for it in three weeks." You get to the end of the year, we've got stock coming in, we've gotta move it around, pick the right day, all of those sorts of things. We're more running a business where you are selecting a day in the next three-four weeks on the large majority of orders. We'll also obviously have containers on the water and look to sell out of those containers. Yeah, you should think of that as four-five weeks sort of trade. That'll be about where it probably remains. That's ultimately as you're right, our role at Focus is not, we don't take custom orders. We're not trying to change. We take a few of them, which will be reflected in there. But largely, it's looking at when the customer can receive the delivery. Obviously you want a pretty full order book, so you don't wanna be sitting here with no deliveries this week on a Monday. Yeah. You know, you sort of run that three-four-week sort of window. If someone needs it urgently, we can probably make those things happen. You know, compared to a lot of our competitors out there, that sort of three-four-week window for delivery is pretty good. Yeah, that's great. Thanks, Mark. Thank you. Your next question comes from Wilson Wong from Jarden. Please go ahead. Hi, guys. Just a question on the trading update. Can you just provide a sort of indication of what sales growth looks like on a like-for-like basis in store closures? Sorry, that was pretty quiet. Yeah, sure. Just in terms of the trading update for the first seven weeks, just an indication of what sales growth like-for-like, excluding Focus and store closures was? No, because I just find it to be irrelevant. It's just not something we're looking at at the moment, Wilsons, given the trading environment last year when you've got 50%-60% of stores closed. Online, as I said, online has come back against that period given the store closures. Therefore, you're left with such a small part of your network that you come back with a number that's largely irrelevant, which is why we think about how we grow it totally and didn't put it in there 'cause we thought it, you know, it didn't truly reflect the way the business was trading. Given our guidance, you know, that's where we wanted to make sure, you know, we're operating in line with that guidance. Yeah. Sure. That's a fair response. I guess just on Focus, I just wanna get a sense of that store model refinement that you previously mentioned. How do you sort of expect this to, I guess, impact EBIT margins on a store basis and sort of any other- Well -uh, Yeah. We'd like to think that we would be improving our EBIT or our contribution performances. We'd consider it at a store basis as we start to think about that refinement. We've tried a few things in terms of product and played around with some stuff in the first six months. We'd like to think that we get a refurb store done in this next period. We would have liked to have done it faster. However, the couple of stores that we would have liked to have done it with, we're just working through some lease negotiations to make sure that we've got a strong enough lease period that we're comfortable investing a little bit of money to see how that works. We've had a couple of actually, you know, over this last half, we had a couple of stores in Melbourne that we would have liked to have done impacted by some of the storms and rain that came through. While we're waiting on insurance quotes and the like, that slowed us down as well. We've got a few stores that we've got earmarked for it, almost ready to go. Just need to lock in these last couple of pieces of the puzzle. Yeah, we think the investment. We probably had an investment of circa AUD 100,000 we thought in the past. I probably think that's more like a couple of hundred because we probably need to upgrade a bit more in lighting than we once thought. We've added that in, but equally, we think we can drive the contribution margin of the stores. That's what we've seen in, obviously at Adairs, as we've been upgrading and upsizing and refurbishing stores it does drive a good sales lift, and lets us showcase the product a bit better. I think we've got an opportunity there and it remains an opportunity. I really would have liked to have had it done so I could point you all to the store you go have a look at it. We just wanna make sure we get the commercials right before we step ahead with that. Sure. Just on that order book, that seventeen- Sorry, what was that last question? The order book for Focus, AUD 17.5 million. Yep. Is that above or below your expectations at this stage? To be honest, it's about where I expect it to be. Coming back to that conversation or question from John, we're not aiming to build a big order book. Our aim is to keep stock flowing and make sure we maintain the inventory and not grow inventory. You know, we will see a growth in inventory in Focus as we put new stores on the ground 'cause we'll have to have display stock element. Our view is how do we keep this business running really efficiently with inventory stock in, stock out, but don't look to build a big order book unless you know the five weeks before we come out and talk about it are bigger in sales than another period. you know, it's probably great for you guys. You, you'll think we're gonna be pushing four-five weeks out. Sure. Thanks for that. Thank you. That wraps up our question and answer session. I'll now hand back to Mr. Ronan for closing remarks. I just wanna say thanks, everyone, for taking the time to join the call this morning. Obviously here at Adairs and across all the brands, we look forward to the year ahead. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.