Store closures blunt Universal Store profit

Store closures blunt Universal Store profit

Universal Store (ASX: UNI) has reported sales dropped by 8.2 per cent to $108.3 million in the December half as mandated store closures hurt the company’s bottom line.

Earnings fell by 37.9 per cent to $19.3 million as the shutdown of stores in NSW, Victoria and the ACT resulted in more than a quarter of trading days being lost. 

The company's bottom line was relatively worse off as in the comparative period it had received $3 million in JobKeeper wage subsidies and $1.4 million in rent concessions, but even after taking that into account there is an $8 million shortfall due to store closures.

While in-store sales dropped by 10.8 per cent like-for-like, online sales surged by 52.5 per cent and accounted for almost a fifth of total sales.

“We are satisfied with the overall result delivered, particularly having regard to the fact that we continue to cycle exceptional LFL sales growth compared to FY21 and the significant trading disruption associated to mandated store closures during July to November 2021,” Universal Store CEO Alice Barbery said.

“Our performance continues to demonstrate the strength of our offering and demand from customers when our stores are open, and customers feel safe to visit shops.”

The company notes “occasions for wear, events, festivals, travel and international students have still not returned to pre-COVID levels” but instead have been “somewhat replaced” by customers shopping for smaller gatherings.

Despite gross profit falling by 8.8 per cent to $61.9 million in the first half of FY22, Universal’s first eight weeks of trade in the current half saw sales rise by 5 per cent year-on-year – a $1.5 million increase in dollar terms.

Group LFL sales (including online) are down 4.8 per cent year-on-year but are up 23.5 per cent versus the corresponding FY20 period.

The COVID-19 pandemic did not impede the opening of nine new stores late into the half. A further three are also expected to open in the next six months.

The relocation of Universal Store’s new office and distribution centre is in progress, which the company believes will support “both capacity and flexibility” for “business growth in the next five to 10 years”.

It is anticipated it will be operational by the first half of FY23.

Shares in UNI are up 0.63 per cent to $6.34 per share at 11.19am AEDT.

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