The Best and Less result is an interesting one. With foot traffic down, but revenue up, and gross profits down what does this mean?

Furthermore, foot traffic was down but average sale price up 9.5% (resulting in the higher overall revenue compared to pcp).

In addition when the results are compared to Myers and JBH they were significantly more subdued.

This had me considering the following…

1. If foot traffic is down does the increase in average sale price mean products are now less affordable for the market BST target?
2. Is the success of JBH and Myers and indication that those who shop at those stores are not facing the same budgetary challenges?
3. If budget apparel stores typically flourish in challenging financial times why has foot traffic dropped? Are other inflationary issues impacting on clothing spend for that group who typically shop at BST?

Summary: We are in interesting times and the inflationary pressures on all retailers at this stage does not appear equal. It will be interesting to see what retailers such as HVN, DUSK and SSG report to get additional information of what is happening in the discretionary retail environment.

BST released a trading update this morning. Please find the ASX announcement below.

On a whole a bit more clarity on their previous ambiguous release. NPAT was down on increased revenue with gross margins impacted compared to the previous corresponding half last period.

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02623872-2A1426898?access_token=83ff96335c2d45a094df02a206a39ff4

Hi @Rick I have re-read the recent results as the share price is again approaching $2.00 and am considering a re-entry. On review of the trading update figures I noticed the following (see below in “..”) which might help explain the LFL figures reported.

In terms of a re-entry I am using a 20% reduction in dividend (10 down to 8c) for the first half of 2023. In coming up with this I am accounting for discounting to maintain sales, and further deterioration in the 2nd half resulting in dividends reducing from 13c down to 10c (23% reduction). I have based this on a combination of factors including inflationary cost factors, slowing in overall retail spending as interest rates bite and a normalisation of spending habits post covid. This overall reduction from 23c down to 18c still enables a 9% return at a $2.00 entry. Using the same 78% payout ratio from 2022 this would represent an earnings per share drop from 28.9c to 22.6c which might seem dramatic based on the update provided but it helps provide me with what I see as a reasonable safety buffer. At present I am looking at the 12m low of 1.90 as an attractive entry point thereby giving me an additional safety margin and even better return. I may though also wait for the first half figures to be realised to provide additional support.

Best and Less (LfL description)

“Like-for-like (LFL) revenue growth is calculated as a percentage change between the total aggregated revenue generated from stores (including online) in a relevant period, compared to the total aggregated revenue from the same set of stores in the relevant previous corresponding period. A store is included in BLG’s LFL revenue growth calculation after it has been trading for a minimum period of 12 months. Each period in which stores were temporarily closed due to COVID-19 for a period in excess of three days has been excluded from the LFL calculation. The periods in which stores were closed for a prolonged period due to refurbishments are also excluded from the LFL calculations.”

Thanks @nessy

Re: Debt

They are in a net cash position of +36.7m.

Trading update from Best and Less

https://bestandlessgroup.com.au/DownloadFile.axd?file=/Report/ComNews/20221122/02601170.pdf

The market did not like it and some investors (including myself) have looked to get out. Currently, down 13.5% as I type.

I had to look over it a few times but the uncertainty was enough for me to sell at a small profit. I had invested in it IRL as a dividend play so I may buy back in again around $2.00 should it retreat this far and they are able to at least maintain earnings.

I have a feeling that B&L can become a HVN type share so buying at the right price to maximise dividend returns whilst selling some when it gets a little over valued and buying back in on retreats might be an option to take advantage of CG and dividends.