Universal Store Holdings Limited has reported an 8.5% lift in total group revenue for the first half of FY24 despite a challenging trading environment.
This was mostly driven by its Thrills brand, which recorded a 4.2% lift in pro forma sales to $25.3 million, with its other fashion subsidiary Perfect Stranger reporting a 59.7% lift in sales to $6.6 million.
The overall lift was offset by a 1.4% drop in sales for its core Universal Store brand to $133.2 million, with like-for-like (LFL) sales down 5.4%.
However, the Universal Store brand’s sales improved during the last half, with sales in the first seven weeks of the second half up 4.5% lift in sales, with LFL sales up 1%.
Perfect Stranger sales still continued its double-digit lift, up 56.5% in the first seven weeks, with LFL sales up 10.3%, while Thrills reported a 0.5% dip in direct-to-consumer sales and a 0.3% slip in LFL sales.
The group highlighted continued shifts in customer spending habits throughout the first half period.
“In response, Universal Store has taken proactive steps to refine its product offerings, placing a heightened emphasis on catering to the preferences of price-conscious customers, while continuing to deliver premium products to those customers with fewer budgetary concerns,” the company reported.
The group also made shifts in business costs (CODB), including optimising store labour and targeted distribution centre productivity enhancements. The Group’s first half CODB as a percentage of sales increased 60 basis points compared to the prior corresponding period, primarily reflecting the impact of a full period of ownership of the Thrills brand. Additional costs relate largely to incremental employee costs.
The group’s gross profit margins were up 80 basis points to 59.7% in the last half, with underlying operating profit at $30.8 million - up 8.1% compared to the first half of FY23.
Statutory net profit after tax was up 16.7% to $20.7 million.
“The results in the half demonstrate our resilience and ability to manage our business as macro-economic conditions fluctuate,” Group CEO Alice Barbery said.
“Our team has successfully managed margins, inventory, and operating costs to deliver earnings growth in a difficult and subdued consumer spending environment. Our growth ambitions for Universal Store remain unchanged, as does our long-term strategy.
“I am also pleased with the progress we continue to make in developing our emerging retail concepts – Perfect Stranger and Thrills. These brands and retail formats are continuously improving their offerings and adding the capabilities necessary to successfully scale and deliver attractive financial performance over the years ahead."
Six new stores opened during the half, including three for Perfect Stranger, two Universal Stores, and one Thrills store, bringing total group stores to 100. Management expects a further 1-3 Universal Store locations to open in the second half, plus 4-8 new Perfect Stranger sites and 1-2 new-format Thrills stores.
This is expected to take the total stores to 106 - 113 by June 30, 2024.
Meanwhile, as initially reported late last year, chief financial officer Renee Jones will be transitioning to reduced hours during the second half, with added finance team support being implemented.
The board is also evaluating alternative approaches to ensure the company has the resources and capability it needs to successfully execute its strategy.