These 3 retail stocks struggled online last Christmas as shoppers flocked back to brick and mortar stores

Nick Sundich Nick Sundich, January 25, 2023

Amidst the wash up of the Black Friday and Christmas trading period, retail stocks are telling shareholders how the busiest time of year went for them.

Three retail stocks gave trading updates this morning and there was one common theme between them…namely, that it was a bad time to be an online retailer. 

 

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Best and Less lives up to the second half of its name

The most prominent was discount apparel retailer Best and Less (ASX:BST), which provided unaudited results for 1HY23. It delivered $324.8m in revenue, up 13% over the prior corresponding period. 

The company tried to grow its revenue not through increased volumes, but through increased prices – the average sale price went up by 9.5%, but like for like sales fell 4.9%. Online sales fell even further, by nearly 30%, and the company’s unaudited NPAT is down over 30% from the prior corresponding period – at $13.7m. 

Best and Less told shareholders that sales for the first three weeks of January were up 14%, although it is worth considering that trading in the prior corresponding period was impacted by the Omicron outbreak.

For 2HY23, the company expects an NPAT of $18-$20m, down 7-16% from the prior corresponding period. The company expects difficult trading conditions, but hopes it can cut costs to minimise the bottom line NPAT. 

 

It was better news for other retail stocks

Other retail stocks reported better trading conditions, at least at their brick and mortar stores.

Accent Group (ASX:AX1), a company that owns several footwear franchises, reported better trading conditions. Sales for the 27 weeks ended 1 January 2023 were up 39% from the prior corresponding period, at $825m.

It is expecting to report $90-$92m EBIT for 1HY23 – roughly triple the $30.3m recorded a year ago – and expects strong trading conditions in January due to ‘back to school’ shopping. 

Fashion retailer Mosaic Brands (ASX:MOZ) also reported higher earnings for 1HY23, with $15.8m EBITDA, up 195% from 12 months ago. This result was driven by a 23% increase in total sales as customers return to in store shopping.

This result would have been even higher but for a $5.1m forex impact from the weak Australian dollar and a 51% drop in sales its online-only retailer EziBuy. 

 

What does this mean for other retail stocks?

This morning’s news should bode well for shareholders of retail stocks with exposure to brick and mortar, especially those with exposure to the ‘back to school’ trade in January.

Shareholders of retail stocks with a heavy exposure to online retail, on the other hand, should be concerned. 

 

 

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