Universal Store shares dive to all-time-low despite predictions of record sales

Universal Store shares dive to all-time-low despite predictions of record sales

Fashion retailer Universal Store (ASX: UNI) is predicting record sales for FY23 and material growth in earnings in the face of a ‘deteriorating macro environment’ and ‘increasingly clear signs that the youth customer is seeing pressures on their discretionary spending levels’.

Announced today via a trading update, Universal is expecting sales to be in the range of $258 million to $261 million, compared to $208 million reported in FY22.

Underlying earnings are also expected to rise from $32.6 million last financial year to a range of between $39 million and $41 million during the current period.

Despite the update on its expected sales performance, investors have savaged UNI shares today which have dived by more than 27.7 per cent this morning to around $2.99 per share at the time of writing - a new low for the retailer which made its ASX debut in November 2020 at $4.50 per share.


RELATED: "People do flock back": Universal Store CEO upbeat on bricks and mortar retail


The company’s guidance comes amid strong performance from new stores, but UNI has warned that its customers are reducing their spending in the current economic environment.

“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,” UNI said.

“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 added that it would ‘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 said.

“The team continue to drive productivity both in-store and online, optimising the cost efficiencies available from the new distribution centre in Eagle Farm.”

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