Best & Less Group’s like-for-like (LFL) online sales have dropped by -29.8% in the first half of FY23 against the prior corresponding period (PCP), with store sales remaining near-even at -0.9%.
Total LFL sales were down -4.9%, despite a growth in total revenue of 13% to $324.8 million, and a gross profit margin of 47.1%.
This discrepancy between store and online LFL sales reflects its results in the first seven weeks of the second half of FY23, with LFL store sales up 7%, and online sales down -23.3%.
In H2 FY23, total sales were up 3.8% and LFL sales up 3.9%, with the group citing the recent impact from extreme weather in New Zealand as well as the Omicron outbreak in the PCP for the result.
“While trading conditions were inconsistent in the first half, our team remained committed to delivering exceptional value and service for our customers,” Best & Less Group executive chair Jason Murray said. “Our core non-discretionary and baby product lines continued to perform well, reflecting the strength of our differentiated value proposition of ‘twice the quality at half the price.’”
For H1 FY23, Best & Less Group said a combination of softer than expected sales, lower gross profit margin percentage and higher costs relative to the PCP - which featured widespread store closures - resulted in pro forma EBITDA of $22.1 million and pro forma NPAT of $13.7 million, with both down -28.2% and -31.8% respectively on the PCP.
The company said the drop in profits come as the company drives investments in omni-channel operations, as it pivots to a ‘one company, two brands’ structure.
The company is investing in a new customer data platform, a new mobile app and consumer website design. The company is also completing the rollout of its new POS system in CY23 valued at $500,000, and has commenced a review of its core planning, merchandising and finance systems.
Moving forward, the company said its growth is expected to be buoyed by continued market share growth in baby, kids and womenswear, achieving above market online sales growth and improving the store network, underpinned by a supply chain transformation.
The company expects to open six new stores in the second half of FY23, including on in the Macquarie Centre in Sydney, bringing its total store count to 251 across AU NZ.
“Having successfully transformed the business to an everyday low price specialty value retailer, we are laying the foundations for the next phase of growth,” Murray said. “We are evolving to a ‘one company, two brands’ structure, which will enable us to operate even more efficiently as we continue to invest in enhancing our omnichannel capabilities and rolling out new stores.
Looking head, Best & Less Group said consumer shopping behaviour continues to normalise towards pre-COVID levels, with in-store traffic increasing while online sales, conversion and units per transaction are continuing to moderate in line with historical norms.
“Despite near-term macroeconomic headwinds, we expect a migration to value and feel confident that the flexibility provided by our vertical retail model will enable us to tightly manage our inventory and costs to deliver our H2 pro forma NPAT guidance of between $18 million and $20 million,” Murray said.