The Best & Less Group Holdings Ltd (ASX: BST) share price is edging lower on Tuesday afternoon. This comes after the clothing retailer provided investors with a trading update for the first 20 weeks of FY22.
At the time of writing, Best & Less shares are swapping hands for $3.41, down 2.57%.
Best & Less fails to live up to expectations
A likely catalyst for today's fall is the shock announcement that Best & Less will not meet its prospectus pro forma forecasts for the first half of FY22. In response, investors have sold off the company's shares on the back of a mixed performance.
According to the update, Best & Less revealed COVID-19 related disruptions have continued to impact its retail stores. Government-mandated restrictions had forced the company to close its doors across Australia and New Zealand.
As such, Best & Less lost a total of 9,272 trading days in FY22, equivalent to 27.5%. The wider lockdown has significantly exceeded the company's previous projections, in which it anticipated restrictions until the end of Q1 FY22.
Weighing further on trading conditions, customer shopping behaviour remains cautious despite all stores recently reopening. Best & Less is hopeful that the Christmas period will bring shoppers back to the retail environment.
On a positive note, for the 12 weeks ending 14 November, like-for-like (LFL) sales have improved by 5.6% on FY21. In addition, online sales grew 34.9% over the same period.
For FY22 year to date, however, like-for-like sales are down -1.3% compared with FY21.
Pleasingly, gross profit margin percentage remains ahead of the company's prospectus forecast. Inventory, operating costs, and cash flow are being carefully controlled by management.
As a result, the first half of FY22 is expected to miss Best & Less' targets. This relates to revenue, earnings before interest, tax, depreciation and amortisation (EBITDA), and net profit after tax (NPAT).
Nonetheless, provided there are no adverse events, the company is predicting to hit prospectus forecasts for the current calendar year. The numbers include pro forma EBITDA and NPAT of $62.4 million and $41.3 million, respectively.
Recap on the Best & Less share price
Since listing on the ASX in late July, Best & Less shares have gained almost 60% for the 3.5 months. The company's share price reached a record high of $4.33 last week, before treading lower.
On valuation grounds, Best & Less presides a market capitalisation of roughly $428.75 million, with approximately 125.37 million shares outstanding.
