Youth fashion retailer Universal Store (ASX: UNI) has served up a strong first half of the 2025 financial year (H1 FY25) underpinned by a solid rise in earnings stemming from robust sales growth and an expanding store network.
Strong financial performance
Total sales of $183.5 million lifted by 16.1 per cent from the same time last year. The company’s flagship Universal Store brand led the charge with $156.1 million in sales, marking a 17.2 per cent increase from the previous corresponding period. Here, like-for-like sales also grew by 14.4 per cent.
Universal Store also notched up a 90 basis points improvement in its gross profit margin to 60.6 per cent, which management attributes to growth in the company’s private brand sales mix and ongoing diligence in managing pricing.
In turn, underlying operating earnings (EBIT) of $35.4 million in H1 FY25 rose by 14.9 per cent from a year ago. This equates to a 15.2 per cent jump in earnings per share. Similarly, underlying net profit after tax (NPAT) of $23.2 million climbed by 16 per cent during this period.
Store network rollout and online growth
The group opened seven new stores in H1 FY25, consisting of four outlets from its namesake brand, two from its Perfect Stranger offering, and one from its THRILLS chain.
In total, the company now boasts 109 physical stores across its three brands, up from 65 in June 2020.
This consists of 84 outlets for its Universal Store brand and nine for THRILLS. The national rollout of its Perfect Stranger retail format also continues to gain traction with 16 stores trading at the end of December compared to just one in June 2021.
Separately, online sales realised a healthy 12.6 per cent increase year-on-year to reach $25.2 million in H1 FY25. They now represent 13.7 per cent of the company’s total sales.
Online sales for Perfect Stranger were particularly strong after more than doubling from the same time last year.
Dividend boost
Universal Store ended the period with a net cash position of $37.7 million, marking a 37.6 per cent improvement from twelve months prior. This helped facilitate a 33.3 per cent increase in the company’s dividend to 22 cents per share fully franked.
Universal Store chief executive officer, Alice Barbery, commented:
“The Group has delivered a very pleasing H1 FY25 result with strong sales growth and robust gross margins…
The youth fashion apparel customer continues to be discerning and willing to spend on on-trend, quality clothing. The Group remains focused on cost discipline as we build our team and system capability to support future growth. This commitment extends across each of our three core businesses.”
Continued growth
Looking ahead, management noted that direct to customer sales were up by 31.8 per cent in the first seven weeks of H2 FY25, when compared to the previous corresponding period. However, it expects wholesale sales to remain challenging during the remainder of the fiscal year.
Meanwhile, new store roll out is on track to achieve previous market guidance of between nine and 15 new outlets in FY25. Five new stores are already confirmed for H1 FY25 with the company also exploring opportunities for additional new stores.