Best & Less flags sales rebound in 2022 as consumers return to shops

Forced store closures in December from Covid-19 saw profit sink but as the economy reopens, the retailer is building sales and earnings momentum to send its share price higher.

Best & Less Chairman Jason Murray and CEO Rodney Orrock. The retailer lost more than one in five trading days in the last half from forced store closures.

Best & Less chief executive Rodney Orrock says consumer confidence gained momentum in February, with car parks at suburban shopping centres filling up as retail outlets prepared to welcome back customers.

The general merchandise retailer, which has 244 stores, is ringing up better weeks since the threat of the Omicron virus has waned and is now preparing for winter sales.

“We are seeing more people out and about, finally we’re seeing the car parks starting to fill up and there are more people in the store,” Mr Orrock said after Best & Less posted a 76.7 per cent fall in its interim net profit and a 16.6 per cent rise in sales.

That result was muddied by its sale and public float midway through the December half. A better indication of the retailer’s trading was underlying earnings, which fell 20.3 per cent to $30.6m with a 13.8 per cent fall in sales to $287.5m.

The market liked the underlying earnings performance and outlook, sending Best & Less shares up almost 9 per cent to close at $3.67.

Mr Orrock said recent trading had shown an uptick in sales and traffic to its stores.

“We had a good week last week with our ‘baby week’ promotion, which is the launch of that for the season and that came through with some good results,” he said.

“So I’ve been watching very closely the trends out of Omicron and it does give us some feeling of confidence in terms of what we’ve got to look forward to.”

While Best & Less managed to meet its calendar 2021 prospectus forecasts despite the huge disruptions to its businesses, in November it warned it would miss its prospectus pro forma forecasts for first-half revenue, EBITDA and net profit after extensive lockdowns and its claims of winter chill crimping sales.

“To have achieved our calendar 2021 prospectus profit forecasts is a great outcome in challenging conditions and is the result of a relentless focus on managing gross margin and costs across the business,” he said.

Online sales rose 24 per cent to $37.9m. Through the first eight weeks of 2022, total sales are down 7.6 per cent.