Best & Less Group (BLG) has more than halved its net profit expectations for the year and accelerated markdowns for winter inventory.
The discount department store expects net profit after tax (NPAT) of between $3.6 million and $4.2 million for the second half of the FY23. This compares to the company's previous guidance of $18 million to $20 million.
In a trading update, BLG cited soft trading conditions for the outlook with reduced sales and foot traffic compared to last year.
As a result, the company has accelerated in-season promotional and discount activity to clear winter stock and reduced yearly inventory. The move has negatively impacted gross margin in the fourth quarter, which is expected to continue into the first quarter of FY24 as the winter season is closed out.
For the five trading weeks from May 15 to June 18, Best & Less total sales were -11.7% or $9.0 million below the prior corresponding period (PCP) while like-for-like sales were -13.2% below the PCP. Best & Less stores reported a 12.5% drop, while online saw a drop of 19.6% in LFL sales.
LFL sales were -4.5% below the PCP (stores: -2.0%, online: -18.6%) for the 24 trading weeks in the second half of FY23.