Despite a “deteriorating macro environment” and “increasingly obvious indications that the young customer is facing pressures on their personal expenditure levels,” fashion retailer Universal Store (ASX: UNI) is projecting record revenues for FY23 as well as a considerable rise in profitability.
In a trade report today, Universal stated that it expects revenues to be between $258 million and $261 million, up from $208 million in FY22.
Compared to last financial year’s earnings, which were at $32.6 million, it has been predicted to increase between the range of $39 million and $41 million for the current period.
UNI shares have plummeted by more than 27.7% this morning to roughly $2.99 per share at the time of writing, a new low for the company, which had its ASX debut in November 2020 at $4.50 per share despite providing an update on its anticipated sales performance.
Despite the company’s strong performance in its new outlets, UNI has been cautioned that customers’ spending is decreasing due to current economic scenarios.
UNI stated: “Group margins and business unit inventory levels have been well 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.”
“More recently, trading conditions observed throughout April and May to date have further tightened indicating that some customers are reducing their spending. The group expects this subdued environment to continue for the balance of FY23 and into FY24.”
“We are comfortable with the current inventory position across the group. Inventory at 30 June, 2023, is expected to be higher than the prior year, primarily due to the CTC acquisition, incremental new store openings, and the higher inventory holding supported by the upgraded distribution centre.”
The company further added that it is determined to ‘continue to make the right long-term decisions despite the challenges of near-term sales volatility and a difficult macro environment’.
“The group remains committed to delivering superior in-store customer service and outstanding on-trend product, deepening relationships and reputation with customers,” UNI conveyed.
“The team continues to drive productivity both in-store and online, optimising the cost efficiencies available from the new distribution centre in Eagle Farm.”
- Published By Team Australia News