The boss of discount clothing and homewares retailer Best & Less says the brand expects Australian families under increasing financial strain to look for bargains on clothing after a year marked by COVID retail closures.
Best & Less revealed on Tuesday its net profits slid by 55 per cent for 2022 to $36.1 million, though revenues were up by 8 per cent to $622.18 million.
Best & Less chief executive officer Rodney Orrock says the clothing company is well-placed to offer lower-cost clothing to shoppers who may be taking a more budget-focused approach.
Chief executive Rod Orrock said that despite losing 21 per cent of total trading days last year due to lockdowns, sales had bounced back in the second half.
He said the company was now well-placed to offer lower-cost clothing to shoppers who may be taking a more budget-focused approach.
“As we move further into an uncertain economic environment, with rising interest rates and cost-of-living pressures placing families under increasing financial strain, we expect an acceleration in the migration to value that is already underway,” he said.
“Our differentiated value proposition of ‘twice the quality at half the price’ and focus on the non-discretionary baby and kids’ segments positions us very competitively to provide a family’s clothing essentials at an attractive price point.”
Inflationary pressures have made themselves felt across the company and some prices have gone up, management says.
“The company has taken action to protect margins, including selectively increasing prices in line with its ‘good, better, best’ product and pricing strategy, negotiating cost mitigation with suppliers, and rationalising materials and product lines,” the business told investors in its 2022 report.
While foot traffic into stores is below pre-COVID levels, it is recovering, with total sales up 38 per cent in the first weeks of 2023 and like-for-like up 1.4 per cent on this time last year.
Best & Less is the latest retailer to report that consumers are still spending across the country. Jewellery brands Lovisa and Michael Hill also surprised the market on Monday with strong results and a positive outlook for the rest of the year.
Best & Less investors will receive a final dividend of 12 cents, bringing the full-year payout to 23 cents.
The market responded warmly to the numbers despite the profit drop, with shares up 6.9 per cent to $2.80 at 10.15am AEST.
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