The Best & Less Group Holdings Ltd (ASX: BST) share price has jumped 10% after the discount apparel retailer reported its FY23 half-year result.
This huge gain compares to the S&P/ASX 200 Index (ASX: XJO) decline of around 0.5%.
The Best & Less share price opened higher at $1.72 and continued to rise through the morning.
Best & Less share price jumps despite tricky first half
Here are some of the highlights for the 26 weeks to 1 January 2023:
- Total revenue grew 13% to $324.8 million
- Pro forma/underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $22.1 million generated
- Pro forma/underlying net profit after tax (NPAT) of $13.7 million generated
- Net cash position of $14.7 million
- Interim dividend per share of 8 cents
The retailer explained that there was weaker consumer demand in the first half, so it reduced prices in key volume lines, which impacted its gross profit margin (which was 47.1% in the first half).
Despite that, the average sales price (ASP) was 9.5% higher than the prior corresponding period.
What else happened in the first half?
The company has been laying the foundations for the next phase of its growth while managing the impacts of the global supply chain uncertainty and inflationary environment.
Best & Less said it's now focused on a number of growth priorities, including market share growth in baby, kids and womenswear, achieving above-market online sales growth, improving its store network and transforming its supply chain.
The business is expecting to open six new stores in the second half. It will have over 250 stores across Australia and New Zealand by the end of FY23.
Best & Less is still searching for a new permanent CEO, with the process "progressing well". Jason Murray will remain as executive chair until a new CEO starts in the role.
What did management say?
The Best & Less executive Chair Jason Murray said:
While trading conditions were inconsistent in the first half, our team remained committed to delivering exceptional value and service for our customers. 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.'
Trading update
In the first seven weeks of trading in the FY23 second half, total sales were up 3.8%, with like-for-like sales growth of 3.9%. Sales growth can be helpful for the Best & Less share price. Like-for-like store sales growth was 7%, while online sales were down 23%.
Consumer shopping behaviour "continues to normalise", with in-store traffic increasing. The supply chain stability is also improving. The company said its inventory position is "well positioned."
It didn't change its previous guidance which suggested that, assuming no material deterioration in economic conditions that impacts sales, it's expecting to deliver a second-half underlying/pro forma NPAT of between $18 million to $20 million. That compared to $21.4 million in the second half of FY22, which included $1.6 million of NPAT from a 27th trading week in that half.
Best & Less share price snapshot
While it is up strongly today, the share price is down around 50% since 22 February 2022.
