The market has seen numerous results during reporting season, with some impressing and others disappointing. The high-yield ASX retail share Universal Store Holdings Ltd (ASX: UNI) saw an initial strong positive reaction, though it has since largely given up those gains, at the time of writing.
The company has a number of businesses including Universal Store, Perfect Stranger and CTC (THRILLS and Worship).
Universal Store reported double-digit revenue growth and underlying net profit growth. Group sales grew 15.5% to $333.3 million, with Perfect Stranger sales of $25.5 million (up 83.1%). Underlying net profit after tax (NPAT) increased 15.2% to $34.8 million. This helped fund an 8.5% rise in the annual dividend per share to 38.5 cents.
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What experts makes of the high-yield ASX retail share
Broker Macquarie said that Universal Store's top-line growth was strong and this continued into FY26. Direct-to-consumer sales were up 17.2% year-over-year in FY26 to date, benefiting from clearances in the comparable period. Macquarie is forecasting a year-over-year sales growth rate of 7.3% for the full FY26 period.
The broker believes the company's store rollout will continue, which should help sales growth going into FY27 by accelerated store rollout in FY26 across its divisions. The high-yield ASX retail share is guiding store openings of between 11 to 17, including four to six new Universal Store stores and five to seven new Perfect Stranger stores.
Macquarie also noted that the gross margin expansion is encouraging, rising to just over 61% thanks to the new Perfect Stranger retail format rollout and increased private label penetration. Due to that, it has increased its gross profit margin to at least 61.6% for FY26 and onwards. Increased sales of private label products can help increase the company's gross margin moat against competitor discounting.
However, the broker also noted that the business cost of doing business (CODB) ratio to sales increased by 130 basis points (1.30%) because of the investment in its team. It also noted that the CTC business saw a significant reduction of profitability because of lower sales and aged inventory.
Macquarie has an outperform rating on the business. The broker concluded:
Outperform. Strong sales growth in 1H25, continuing into 2H25, with GM % expansion YoY and private label continuing to increase. UNI continues to win market share, with ongoing store rollout supporting network sales growth.
Price target on Universal Store shares
A price target is where analysts think the share price will be in 12 months from now.
Macquarie currently has a price target of $10.20 on the high-yield ASX retail share implying a rise of 14% from where it is at the time of writing.
But, the broker is also forecasting the annual dividend per share could increase by just over 10% to 50.2 cents. At the current Universal Store share price, that translates into a fully franked dividend yield of 5.6% and a grossed-up dividend yield of 8%, including franking credits.
Excluding franking credits, the total return could be close to 20% in the next year.
