Shares in homewares retailer Adairs have surged on strong first half sales, an increased dividend, and high hopes around the handy acquisition of NZ-based Mocka in December.

Adairs shares were trading 8.54 per cent higher at $2.605 at 1350 AEDT – the highest price in nearly 18 months – after it lifted total revenue by 9.7 per cent to $180.3 million in the six months to December 29.

Like-for-like sales grew by an impressive 6.9 per cent during the period, boosted by a massive increase in online traffic.

Like-for-like in-store sales growth of 4.9 per cent was driven by strong performance across core categories and ongoing growth from key expansion areas of Adairs Kids and Home Decorator.

Statutory profit was down 11 per cent to $13.2 million, but the company’s pro-forma profit rose 4.2 per cent to $15.7 million when factoring in various lease provisions and the $81.8 million acquisition of Mocka.

“The first half of FY20 was significant for Adairs with record levels of sales and profitability, the acquisition of Mocka and the finalisation of our domestic supply chain strategy,” Adairs’ chief executive Mark Ronan said.

Adairs management expects Mocka – which sells furniture, kids furniture and baby goods – will help online sales rise from 18 per cent of total sales to 29 per cent for the full year.

Shareholders will receive a fully franked interim dividend of 7.0 cents per share, up from 6.5 cents about 12 months ago.

The company did however admit like-for-like sales growth had slowed in the first seven weeks of the year, down to 2.3 per cent.

Adairs said it had been fortunate the impact of the bushfire disaster on its business had not been significant.

Balancing the strong first-half result against medium-term uncertainties, including the potential impact of the coronavirus, Adairs has elected to leave its FY20 guidance unchanged.

FY20 guidance based on a pro-forma full-year contribution from Mocka is an earnings figure of $52 million to $56 million, and $400 million to $415 million in sales.

Adairs expects to increase net new stores by one or two, and upsize three to five existing stores across Australia and New Zealand during the second half.