The top challenge facing Alice Barbery and her leadership team at Universal Store is the shrinking of its Thrills wholesale business.
Making up just 5 per cent of total revenue, Thrills’ wholesale arm has been losing sales over the last year. Thrills is part of the Cheap Thrills Cycles business, which also manages the Worship private label.
In FY25, wholesale sales hit $29.2 million, including sales made from CTC to Universal Store, which were down $4.7 million or 13.8 per cent on FY24, with growth in Worship more than offset by the sales decline in Thrills.
This comes alongside slumps across fashion wholesale in Australia, with IBISWorld projecting a further decline in clothing wholesaling of 3.4 per cent over the five years through to 2025 to 2026, rounding off at $6.6 billion.
Thrills also recorded a total sales slip (including DTC) in FY24, offset by a boom in the Worship label, with global wholesale sales for CTC up 5.4 per cent in the FY24 financial year.
But this downturn for Thrills appears to be swinging back, with its wholesale results down just 6.3 per cent in the first quarter of FY26 – an improvement from the 13.8 per cent fall in FY25, and a 16.4 per cent plunge in the first half of FY25.
Analysts at investment bank Macquarie, in a note to investors, say this swing suggests that group CEO Alice Barbery's focus on Thrills brand may be leading to a gradual recovery.
Barbery rejigged her focus across the group in March 2025 this year when she created a new divisional CEO role and promoted the then-head of product, George Do, to the role. This was done to help Barbery focus on CTC’s “strategic potential” alongside the long-term strategy for the group, with Do's role covering both Universal Store and Perfect Stranger.
Do has been part of the Universal Store team for 16 years, commencing his career there as a buyer.
Despite this snag in wholesale, it is not enough to dampen financial analysts’ view of Universal Store’s stock (ASX:UNI). In fact, Macquarie analysts still label Universal Store as an outperformer in the market, following the fashion group’s recent trading update.
Universal Store itself reported a total DTC sales lift of 11.4 per cent for the first 17 weeks of FY26, with its sister brands Perfect Stranger and Cheap Thrills Cycles also up by 40.5 per cent and 14.1 per cent respectively.
“Strong trading update for 1st 17wks was delivered on tough comps relative to the 1st 7wks update, with the update implying achievable trading in the half-to-go to meet VA 1H26 Cons,” Jarden analysts shared in their own note to investors.
Jarden is reiterating its buy rating over UNI stock, alongside Macquarie and even Citi. Analysts at the investment bank also pointed out that UNI stock trades around one-and-a-half times price-to-earnings-to-growth (PEG).
On top of that, Jarden told investors that retail stocks are less leveraged to interest rate cuts, and are likely to see relatively higher flows compared to earlier in the calendar now that there are increased concerns that interest rates won't be cut as much as the market previously expected.
Recent CPI data showed inflation has lifted higher than expected in the September quarter.
“We continue to view UNI as our preferred small-cap fashion exposure, trading at a 25%+ discount to LOV's >~2x PEG, and are increasingly attracted to its strong store rollout pathway,” Jarden noted, pointing out that Universal Store is projecting to open 11 to 17 new stores in Fy26.
“We believe it has best-in-class management within a tough vertical, and increasing long-term optionality associated with its multi-brand and, potentially over time, multi-region platform.”
Alongside store and sales growth, Jarden also highlighted that Universal Store’s gross profit margin is around 61.7 per cent, based on the fashion group’s note that FY26 year-to-date margin were consistent with the second half of FY25. Jarden claimed this is 50 basis points ahead of consensus.
“The strong margin was attributed to increased mix shift toward PS [Percfect Stranger] and improved category sales mix in the winter season, partially offset by a weaker AUD/USD.”
As for Citi analysts, they are not getting carried away with the better sales run-rate. While year-to-date sales in 1H26 are ahead of expectations, Citi thinks it is prudent to wait to see how Universal trades through the upcoming key Black Friday and Christmas sales periods before making changes to forecasts.
“Historically, the business does 55% of FY sales in 1H due to Black Friday, but gross margins would be higher in 2H due to less promotional events.”
Universal Store is also investing in team and system capability to further drive performance, with new point-of-sale equipment being implemented in the second half after peak trading.