Universal Store Holdings is expecting group sales to be between $258 million to $261 million for FY23 despite what it calls a “deteriorating macro environment.”
This prediction is up $50 million compared to its FY22 result of $208 million.
Universal Store sales are expected to be in the range of $238 million to $240 million (which compares to $208 million in FY22, and $211 million in FY21).
Underlying FY23 sales for its newly acquired Thrills business (full year, including the period pre-acquisition) is expected to be in the range of $40 million to $42 million, which compares to $35 million in FY22.
Overall, the Group’s underlying earnings before interest and tax (EBIT) is projected to hit between $39 million to $41 million, which compares to $32.6 million in FY22.
“Despite a deteriorating macro environment, and increasingly clear signs that the youth customer is seeing pressures on their discretionary spending levels, FY23 is on track to be a year where the Group delivers significant financial and operational milestones,” the company wrote in its trading update today.
“The Universal Store business is on track to deliver record sales, new stores have performed well, and the business has successfully adjusted its’ offering to cater to the changing channel preferences of customers.”
Regarding Thrills (CTC), Universal Store reported it is settling well into the Group.
“CTC will deliver record sales, solid earnings, and especially encouraging performance from the emerging Worship brand.”
There are currently 10 Thrills stores across Australia, alongside 77 Universal Store sites and eight Perfect Stranger locations.
Universal Store Holdings expects four new store openings in the first quarter of FY24, which were originally slated for H2 FY23.
Regarding Perfect Stranger, the Group sees strong potential for an “economically attractive national roll out” ahead.
Meanwhile, the Group’s margins and business unit inventory levels are being managed against a backdrop of increased promotional discounting activity from peers and some evidence of overstocking in the market.
“The Group results speak to the strength of the business model as well as its agility and skill in navigating market volatility,” the Company reported. “More recently, trading conditions observed throughout April and May to date have further tightened indicating that some customers are reducing their spending.”
Its inventory at June 30, 2023 is expected to be higher than the prior year, with Universal Store Holdings noting this is primarily due to the CTC acquisition, incremental new store openings, and the higher inventory holding supported by an upgraded distribution centre.
The Group relocated its support office and distribution facilities to Eagle Farm, Queensland, noting no major disruption to stock flow, team retention and operations.
Looking ahead, the Group expects the subdued macro environment to continue for the balance of FY23 and into FY24.
“The Group will continue to make the right long-term decisions despite the challenges of near-term sales volatility and a difficult macro environment.”