Specialty youth retailer, Universal Store Holdings (ASX:UNI), has delivered a stellar June 30 result, showcasing surging sales, earnings, and a higher dividend.
The retailer of casual youth fashion reported a banner 12 months for the period ending June 30 and indicated a strong start to the new financial year.
Unsurprisingly, the shares surged over 13% yesterday, outperforming many other retailers with a near-best-in-class performance.
Group sales for the June year increased nearly 10% to $288.5 million, reflecting strong trading momentum throughout the financial year. This achievement was despite a weak first half for its main chain, Universal Stores, which was almost reversed by a second-half surge as management refined the offering and merchandising.
This led to a jump in gross margin to 60.1%, resulting in a 16.1% increase in underlying EBIT to $47.1 million and a 45% surge in statutory net profit to $34.3 million.
As a result of this outperformance, the company will pay a final dividend of 19 cents per share, boosting the full-year payout to 35.5 cents, up sharply from 22 cents the previous year.
Universal said it had 102 physical stores at June (up from 95 a year earlier), comprising 80 Universal Store sites, 14 Perfect Stranger sites, and 8 sites for its THRILS label. Additionally, it had over $14 million in cash at the end of June.
After a decline in the six months to December, sales through the Universal Stores chain improved significantly in the second half. On a full-year basis, Universal Store like-for-like sales dipped 0.3%, driven by a 6.6% surge in the June half after a 5.4% first-half slump.
CEO Alice Barbery stated in Thursday's release, "Our success this year underscores our commitment to customer-centricity and operational excellence. We maintained a steadfast focus on managing margins, optimising inventory, and controlling costs, which drove significant earnings growth in a challenging consumer environment."
Sales growth of 9.7% was achieved through same-store sales growth of 5% to 6.4% in the second half and the continued growth of Universal Stores after the first-half slip.
The company said costs of doing business fell due to strong inventory controls. Group gross margins also expanded by 110 basis points, driven by the consolidation of CTC brands (THRILS and Worship), private brand penetration, direct sourcing of private brands, and reduced inbound freight costs, partially offset by adverse foreign exchange movements.
The company noted that the first seven weeks of 2024-25 had started very strongly compared to the same period in 2023-24. Sales in its Universal Stores outlets were up 15.3%, with like-for-like sales up 12.5% after a fall of 9% in the same period last year. Sales through its Perfect Stranger chain were up 89.9%, with like-for-like sales up 24.3%. CTC (Cheap THRILS) sales through Direct-to-Consumer Channels (stores and online) increased by 13.3%, with like-for-like sales up 22.4% compared to a 4.1% rise a year ago.
Like Breville's performance in Wednesday's announcement, Universal Stores has defied the convenient explanation for weak sales and earnings in the consumer discretionary retail sector. Stainless steel appliances and stylish, edgy fashion may not be everyday purchases for many consumers during tough times, but both companies have demonstrated that this is not always the case.
