Australian fashion retailer Universal Store has seen triple-digit growth in its recent Thrills acquisition, completed in late 2022, alongside double-digit growth in its total group sales for the first half of FY23.
Also known as Cheap Thrills Clothing or CTC, the brand’s wholesale performance grew by 33.3% in pro forma H1 FY23, with CTC stores reporting a growth in sales by 214.4% against the prior corresponding period.
Universal Store said CTC’s results only include November and December 2022, following the completion of the acquisition in October.
The group also said the team behind CTC is settling into a new version of ‘business as usual’ post acquisition and are adapting to the needs of changed ownership and governance, including a new GM appointed in November 2022.
There are currently ten Thrills stores across Australia (as at December 31, 2022) with H1 FY23 retail sales totalling $3.2 million.
Universal Store said there is a significant amount of ongoing work with the CTC team to improve the Thrills store format, in-store execution and building the capabilities required to support future growth in the retail channel.
CTC inventory levels appropriately balanced at $2.6 million, having regard to forward orders from wholesale accounts, and retail and online sales momentum.
Meanwhile, total group sales for Universal Store (which harnesses dozens of local and international clothing brands) were at $145.7 million, up 34.5% on the prior corresponding period. This is up 28.6% when excluding CTC sales.
It also reported an uptick in brick-and-mortar sales of 39.8%, with a drop in online sales of -5.4%, saying the channel mixes are beginning to normalise post-COVID.
The group said the results are buoyed by the reopening of physical stores and customers returning to stores after government-mandated closures in the prior comparative period.
Group like-for-like sales (excluding CTC retail channels) grew by 2.4% compared to the prior comparative period, noting that stores closed in the prior period are excluded from the calculation on the applicable days for which the store was closed.
Group gross profit was $85.8 million with a 170bps improvement in gross margin to 58.9%, with the prior period impacted by one-off mark-downs associated with store closures.
Universal Store said margins were also supported by price increases to maintain quality, direct sourcing enhancements and reduction in freight costs. It also said that private brand penetration remained steady at 44% of sales during the half.
Group cost of doing business increased by 270bps to 30.6% of sales, due to increased employee costs, occupancy costs, and expenses from the CTC acquisition. The growth in employee costs reflects increased spend of $6.2 million in store wages and $1.5 million in DC wages, according to the group, with the lower prior comparative period spend a result of the store closures.
Investments into new stores continue, while the recent CTC acquisition also added $2 million of predominantly employee costs. Other costs, including software licensing and investments in process improvements, grew by $1.3 million.
Group underlying EBIT was $28.5 million, a 43.2% increase from the prior period, and the underlying NPAT was $19.5 million, a 44.4% increase.
Universal Store Group CEO Alice Barbery said the performance and growth during the half was pleasing.
“The successful relocation of the distribution centre and support office teams to a new purpose-built facility in October positioned the company well for the busy summer trading season,” Barbery said “With the lifting of COVID restrictions, large social gatherings like festivals and concerts are gaining momentum, leading to an increase in foot traffic as customers plan for these events.
“The integration of CTC into the company is going smoothly, and the Group is excited to achieve its shared strategic goals.”
For the second half of FY23, the group is planning to open between four and six additional Universal Store locations in the second half of FY23, along with three-four new Perfect Stranger stores and one new Thrills store.
Its goal is to have over 100 total group stores, excluding three webstores, by June 30, 2023. Currently, the group operates 93 physical sites.