Family apparel retailer Best & Less (ASX: BST) has reported "inconsistent" trading conditions for March and April alongside a sharp decline in online sales in the year to date, prompting a sharp downgrade in profit guidance for the current half-year to $10-12 million.
This compares to a profit guidance of $18-20 million for the June half as announced in late February, when the group reported a 31.8 per cent decline in pro forma net profit after tax to $13.7 million in the December half.
Currently the target of a takeover offer from retail investor BBRC International and Sanity owner and Honey Birdette co-founder Ray Itaoui, and with The Iconic CEO Erica Berchtold set to take the helm in September, Best & Less has had trouble besting its Christmas performance as was previously hoped.
Whilst total sales were up 1.8 per cent at $221.9 million for the first 19 weeks of trading to date, like-for-like sales were down 1.4 per cent and online sales dropped 18.2 per cent.
The company notes that sales improved in the lead up to Mother's Day, an event when sales performance was strong for the retailer, and recent trading in May has been encouraging.
However, with only seven weeks remaining and based on results to date, Best & Less has downgraded its profit guidance, taking into consideration that May and June are key trading months and assuming "no further material deterioration in economic conditions that impact sales".
"While trading conditions have remained inconsistent as consumer confidence has been at historic lows, we had a strong Mother’s Day," says Best & Less executive chair Jason Murray.
"With the Federal budget expected to provide some much-needed relief for our core customers and a further four new stores due to open before the end of the calendar year, we are optimistic about the outlook for sales growth.
"We expect to see the benefits of lower product and shipping costs begin to flow through in the first half of FY24 and we will remain focused on tightly controlling our cost base to preserve profitability."
BST shares fell 3 per cent in early trading this morning to $1.85 - just below the $1.89 per share offer put forward by BBRC International and Ray Itaoui for shares they don't already own, but below the volume weighted average price of $1.934 per share in the three months prior to the offer.
Get our daily business news
Sign up to our free email news updates.
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support