Adairs (ASX:ADH) will take over operational control of its National Distribution Centre (NDC) from DHL Supply Chain Australia, starting 6 September 2023.

Since its inception in 2021, the DHL-operated NDC has been operating below expectations, leading to less than satisfactory customer experiences and increased operating costs.

Adairs plans to improve these outcomes by assuming control of the facility.

The company plans to spend around $18 million in capital expenditure over the next year, including payment to DHL for the acquisition of all warehouse operating assets and the replacement of DHL’s warehouse management system.

The change is expected to generate an annual cost saving of around $4 million and be EPS positive from year one.