The Best & Less Group Holdings Ltd (ASX: BST) share price has had a cracking past week on the market.
In the space of 5 trading days, shares in the clothing retailer have marched 18.9% ahead. This continues the successful trend that Best & Less has experienced since its ASX-listing in July. The company's share price has surged more than 38% in its 51 days of publicly listed life.
Right now, the Best & Less share price is swapping hands for $3.32 apiece, up 2.47%.
Let's inspect the company and gain an understanding of what has propelled its shares higher recently.
Is no news good news?
Despite the Best & Less share price ascending to new all-time highs, the last week has entailed not much at all. This could be a positive for investors. It appears the business is focusing on the task at hand and executing accordingly.
The period of uneventfulness has ensued following the company's release of its full-year results for FY21. Impressively, Best & Less exceeded its prospectus forecasts on all key metrics. This included increasing revenue by 6.1% to $663.2 million year-over-year.
Perhaps, even more, astonishing, the company's net profit after tax skyrocketed 191.9% to $47 million. This milestone accomplishment surpassed its prospectus forecast by ~18%. This demonstrated that Best & Less is a formidable ASX-listed retailer that is able to turn a hefty profit.
It is possible that more investors are now paying attention and take a closer look at the retailer. If so, it could be warranted considering the fundamentals on display.
For example, at its current market capitalisation of $406.2 million, Best & Less is trading on a price-to-earnings (P/E) ratio of 8.6 times. In comparison, ASX-listed company's that Best & Less considers competitors are fetching much richer earnings multiples, as shown below:
- Baby Bunting Group Ltd (ASX: BBN) with a $675 million market capitalisation trades on a 40 times 12-month trailing P/E ratio
- Reject Shop Ltd (ASX: TRS) with a $233 million market capitalisation trades on a 28.4 times 12-month trailing P/E ratio
- H & M Hennes & Mauritz AB (STO: HM-B) with a $40.5 billion market capitalisation trades on a 48.2 times 12-month trailing P/E ratio
It would seem that the broader market is pricing in low to no growth in the near term for Best & Less by comparison. Although, the company has already committed to 4 net new stores in FY22 to date.
Best & Less share price unfazed by lockdown impact
It also appears investors are willing to look beyond the immediate COVID-19 impacts on retail shares. In July, the Australian Bureau of Statistics reported a 2.7% month-on-month fall in retail sales.
Today, National Australia Bank Ltd. (ASX: NAB) has shared its forecast for retail sales in August. Unfortunately, it's not looking pretty. In its note, NAB stated it expects an additional 2.7% month-on-month reduction in retail sales for August due to lockdowns.
These difficult conditions were also reflected in an FY22 trading update released by Best & Less today. According to the release, for the first 8 weeks of the new financial year, total sales were down 25.7%. Similarly, like-for-like sales were down 11.7% compared to FY21.
Despite this, the Best & Less share price is climbing higher today.
