Discount apparel retailer Best & Less says weaker than expected consumer demand and pressure on margins have led to the company expecting a decline in half-year profit for the six months to December.
The company told investors on Wednesday it has seen a 13.4 per cent jump in total sales for the first half the financial year to $324.8 million, but online sales dropped by 29.8 per cent.
While trading was strong over the Black Friday and Christmas periods, “this momentum was insufficient to fully offset the impact of delayed summer weather and supply chain delays”, the company said.
Best & Less is now expecting to report a net profit of $13.7 million for the half – a 31 per cent drop on the result for the same time last year.
The group said it would open six new stores in the coming months and was working to implement cost-saving initiatives to match the current trading environment.
“While we are cautious on the near-term macroeconomic outlook, our vertical model and the deep retail sector experience of our team gives us the ability to respond and adapt rapidly,” chair Jason Murray said.
Best & Less group shares opened lower and were down 4.2 per cent to $2.02 at 10:15am.
The update from Best & Less comes as other larger retailers, including JB Hi-Fi and Myer, have told investors they have benefitted from strong trading conditions over the Christmas period. Myer said yesterday that it had recorded its best result for sales in the first five months of the financial year since its current model of financial records began in 2004.
Footwear retailer Accent Group and Millers operator Mosaic Brands also reported strong trading updates on Wednesday.
Accent shares leapt by 10.7 per cent after the company said sales for the first 27 weeks of the financial year were up by 39 per cent on last year.
Mosaic said group earnings were expected to be around $15.8 million for the first half of 2023, an increase of 198 per cent on last year. Its shares opened 5.3 per cent stronger to 30 cents.
Other retailers have reported over the past two weeks that conditions are slowing, however: Baby Bunting said its December trading period was weaker than expected, while electronics retailer Kogan said sales declined by 32.5 per cent for the first half of the year.
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Source: Thanks smh.com