Best & Less Group (BLG) will focus on expanding its store footprint, with agreements already in place to open 11 new stores for FY23. As well as this, three additional stores will be relocated to larger sites.
BLG opened six new stores and relocated four stores in FY22, while two additional stores had expanded its floor space.
However, nine stores were closed during the period as BLG remains willing to discontinue leases where the market is unviable.
This brings BLG's total store count to 242 as of July 3.
The move to open new stores comes as BLG announces financial growth for FY22, with a gross profit margin of 49.1%. This is despite a 10.8% loss in trading days, where resilient trading performance procured a total revenue of $622.2 million for the company, down from $663.2 in FY21.
BLG CEO Rodney Orrock said while the first half of FY22 was disruptive, with covid lockdowns and consumer uncertainty in the mix, the second half saw a strong return to sales across the board.
“Our team kept their eyes on the ball, doing a great job to control the things that could be controlled, delivering significantly higher sales and strong margins, while continuing to provide superb service to our customers,” Orrock said.
“As we move further into an uncertain economic environment, with rising interest rates and cost-of-living pressures placing families under increasing financial strain, we expect an acceleration in the migration to value that is already underway.
Online sales for BLG grew by 15.6% in FY22, a decrease in ongoing growth from FY20 when the company saw a 56.8% growth. Online sales in FY21 were at 33.5%.
This included increased conversion driven by an enhanced online customer experience and diverse fulfilment options. The online channel delivered 11.3% of total sales in FY22 (FY21: 9.2%).
FY22 pro forma EBITDA of $62.5 million was down year-on-year, which BLG puts down to the 9,679 of lost trading days and subsequently reduced sales revenue.
Effective supply chain management, retail price increases and a tight focus on managing CODB enabled BLG to preserve a strong double-digit EBITDA margin of 10.0%.
“Our differentiated value proposition of ‘twice the quality at half the price’ and focus on the non-discretionary baby and kids’ segments positions us very competitively to provide a family’s clothing essentials at an attractive price point,” continued Orrock.
“In the face of global supply chain disruptions and input cost inflation, we expect the strength of our vertical retail model and the retail experience of our team to shine through.
“This enables us to continue to take market share, while maintaining gross profit margin and tightly managing costs, delivering continued operating leverage as we grow.”
During the financial year, BLG invested in its online sales platform and added new fulfilment options such as ‘click and collect’ and ‘ship from store.’ This improved online capacity and service by fulfilling online orders from select Best & Less stores closer to the customer’s location.
The Best & Less mobile app also continues to improve online conversion and increased session duration and contributed to loyalty program members growing by 10.1% to ~1.9 million across Best and Less and Postie at year end.
As well as expanding its store portfolio, BLG will continue to focus on growing market share in its core baby, kids’ and womenswear categories, while tightly managing CODB and inventory in response to continued inflationary pressures and supply chain disruptions.
“Our robust balance sheet and strong cash generation underpins our confidence to pay a final dividend of 12¢ per share fully franked, while continuing to accelerate our investment in BLG’s growth and capability,” Orrock finished.