Why did the Adairs share price fall 18% in June?

The Adairs Ltd (ASX: ADH) share price continued to tread lower throughout June despite the company not making any announcements.

Shares in the homewares and furniture retailer last traded at $2.32 on 31 May and closed at $1.91 on 30 June. This represents a decline of around 18% for last month and a sharp contrast from its lofty $4 highs in January 2022.

At the time of writing, Adairs shares are swapping hands at $2.01, up 2.29%.

Let’s take a look at what’s impacted the company’s shares in recent times.

What dragged down Adairs shares last month?

A gloomy economic outlook caused by soaring inflation levels and interest rate hikes weighed down on investor sentiment.

However, the biggest and most notable declines for the company’s shares came between 6 June and 15 June, down 25.56%.

This was when investors reacted to the Reserve Bank of Australia’s (RBA) decision to tighten its monetary policy.

The RBA ramped up the official cash rate by 0.5% to 0.85% on 7 June.

And the RBA governor, Philip Lowe warned that more rate hikes would likely occur in 2022.

With the cost of living severely impacted, this puts pressure on discretionary spending from consumers.

The monthly household spending report for June is set to be released on 9 August. This will give a clearer picture of the country’s economic growth.

Nonetheless, it’s apparent that investors are bracing for the worst which has sent the Adairs share price in a tailspin. Many economists are predicting the cash rate to hit up to 2.35% by the end of this year.

Adairs share price snapshot

A challenging microenvironment has led the Adairs share price to register a loss of 50% in 2022.

It’s worth noting that its shares reached a 52-week low of $1.65 on 17 June before recovering some lost ground.

For context, the S&P/ASX 200 Consumer Discretionary (ASX: XDJ) sector is also in the red this year by 22%.

Based on valuation metrics, Adairs commands a market capitalisation of approximately $331.50 million.

The post Why did the Adairs share price fall 18% in June? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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