Best & Less has released its preliminary Q4 results, with softer than expected sales forcing the company to revise its previous guidance.
Best & Less Group Holdings Limited (BLG) today provided an update on trading for the period from May 25 to June 18 2023. Trading conditions have continued to soften, for the retailer as they further revise their guidance to reflect dwindling sales.
In May, Best & Less lowered its expected NPAT from $18-$20 million as predicted at the release of its first half results, down to just $10-$12 million. The company has further revised that in today’s update to between $3.6 million and $4.2 million, which excludes a potential after tax impairment charge on Right of Use Assets of between $1.5 million and $3.0 million.
For the five trading weeks from 15 May to 18 June, total sales were down 11.7 percent, or $9.0 million below the prior corresponding period (PCP) and LFL sales were 13.2 percent below the PCP. Online shopping has seen the most decline, down 19.6 percent on the PCP and in store shopping down 12.5 percent.
Further expense management initiatives have been implemented to right size Best & Less’s cost base for the conditions, however the full benefit of these actions and lower product and shipping costs will not be seen until H1 FY24. For H2 FY23, BLG now expects to deliver total revenue of between $310 million and $315 million, down slightly from H1 revenue which was $324.8 million.
In recent weeks, Ray Itaoui has joined Best & Less as Executive Chair as the Blundy takeover bid was accepted. He has assumed the responsibilities of CEO for an interim period until incoming CEO Erica Berchtold joins the business in September. Since joining the Company on June 6, Mr Itaoui has rapidly implemented a range of actions to ‘position BLG for more challenging trading conditions’. In-season promotional and discount activity to clear winter stock has been accelerated, and yearly inventory is also being reduced to align BLG’s inventory position with current demand and maintain inventory quality. Best & Less notes that this activity has negatively impacted gross margin in Q4, and is expected to continue into Q1 FY24 as the winter season is closed out.
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