Universal Store (ASX:UNI) management highlighted “strong” first-half FY2026 results and outlined continued investment in people, systems, and store network growth during its earnings call, pointing to sales growth across its retail banners and margin expansion supported by product mix and inventory discipline.
First-half results: sales growth, margin expansion, and higher earnings
Group sales for the first half rose 14.2% from the prior corresponding period to AUD 209.6 million. Management reported underlying EBIT of AUD 43.6 million, up 23.2%, representing 20.8% of sales, while underlying NPAT increased 22% to AUD 28.3 million. Earnings per share rose 21.5% to 36.8 cents.
Cost of doing business increased 50 basis points to 31.4%, which management attributed to ongoing investment in team and system capability, as well as higher long-term incentive (LTI) and bonus expense in line with stronger results. Wage inflation and team investment lifted costs by AUD 3.4 million, while new stores and like-for-like growth added AUD 4.7 million in incremental store-related costs, partially offset by leverage from sales growth.
Banner performance: Universal Store, Perfect Stranger, and CTC
Universal Store posted first-half sales of AUD 174.8 million, up 11.9%, driven by like-for-like growth of 8.7% and new stores. Gross profit margin increased 190 basis points year over year, supported by assortment strength, category mix, and pricing discipline. Management said private brand mix increased to 55% from 52% in the prior period, and noted Neo Vision contributed 19% of Universal Store format sales.
Perfect Stranger delivered sales of AUD 17.8 million, up 41.5%, driven by new stores and like-for-like growth of 14.8%. Management emphasized ongoing focus on building brand awareness, “range elevation,” and network expansion. Due to operational integration with Universal Store, management said a “meaningful view” of Perfect Stranger EBIT could not be provided.
CTC (including Thrills and Worship) reported total sales of AUD 23.2 million, up 4.8%. Direct-to-customer sales rose 25.5% to AUD 7.2 million, driven by store growth and 9.5% retail like-for-like growth. Wholesale sales declined 2.4%, which management attributed to a planned reduction in U.S. exports due to increased tariffs and softer trading conditions. CTC gross profit margin increased 150 basis points to 46.8% on higher retail mix and improved price management, while underlying EBIT rose 25.2% to AUD 2.3 million.
Store growth, operations, and investment priorities
Management said the group opened eight new stores in the first half, bringing the store footprint to 118 physical stores as of December 31. Universal Store opened four new stores (ending at 87 stores), Perfect Stranger opened three (ending at 22 stores), and CTC opened one (ending at nine stores). The group reiterated it remains on track to deliver prior guidance of 11 to 17 store openings in FY2026.
Beyond stores, the leadership team discussed organizational and operational initiatives, including:
- Broadening the scope of the HR function with a new GM appointment, aimed at deeper governance focus in safety, payroll integrity, recruitment, and technology enablement.
- Strengthening cyber security and loss prevention, and working on a plan to reform technology teams to raise delivery standards.
- Exploring ways to enhance warehouse management capabilities and systems to support efficiency and scale.
Management also discussed leadership changes, including the appointment of George Doh as Divisional CEO for US and PS, which Alice said brought “elevated and renewed energy” and momentum behind new initiatives.
Balance sheet, cash flow, and dividend
The group ended the half with a closing cash balance of AUD 38.4 million and no bank borrowings (outside of lease liabilities). Inventory rose 18% to AUD 33.5 million, which management linked to increased store numbers and investment to support customer demand.
Operating cash flow was AUD 72.1 million, up 3% year over year, with management citing strong profitability partly offset by working capital timing. EBIT-to-cash conversion was 112%. Capital expenditure during the half was associated with new stores, refurbishments and relocations, and IT hardware.
The company declared a fully franked dividend of AUD 0.26 per share.
Second-half trading update: continued growth, mixed online performance at CTC
In a trading update, management said FY2026 year-to-date direct-to-consumer sales were up 13.5% on the prior corresponding period. Universal Store total sales were up 11.4% with like-for-like sales up 7.1%. Perfect Stranger total sales were up 39% with like-for-like sales up 4.9%.
For CTC, direct-to-consumer sales were up 14.6%, but like-for-like sales were down 10.2% due to a 31.7% decline in online, which management said was cycling elevated markdown activity from January 2025. Conversely, CTC bricks-and-mortar sales were up 18%, which management said was the highest growth in the group.
On the call’s Q&A, management addressed gross margin sustainability and foreign exchange. Executives said they do not set explicit targets for private brand mix and remain “customer-led,” while noting private brands are resonating. They reiterated that currency was a headwind in the first half but described a tailwind emerging in the second half, with most benefit expected later due to timing. The company outlined a “tiered” hedging policy over a 12-month period and said roughly half of FY2026 spend was hedged at present, with some FY2027 hedging already in place within policy.
Management also discussed navigating brand cycles through frequent data monitoring and a close-to-market strategy, as well as store relocations and refurbishments, saying relocations historically have delivered “exceptional” uplift and that the company has “never gone backwards” after relocating or refurbishing, although it did not provide a specific figure.
About Universal Store (ASX:UNI)
Universal Store Holdings Limited designs, wholesales, and retails fashion products for men and women in Australia. It operates through Universal Store and CTC segments. The company’s products include tops, dresses, jerseys, jeans, skirts, matching sets, T-shirts, vests, pants, cardigans, jackets and coats, jumper and hoodies, shirts, shorts, blazers, bralettes and swim wear; denim products; shoes, such as crocs, birkenstocks, sneakers, sandals, loafers boots, thongs, jibbitz, and kids shoes. It also provides accessories, including jewelry, hats, bags, jibbitz, sunglasses and glasses, wallets, socks, watches, belts, grooming, laces, and sexual wellness; and gift products consisting of games, homewares, gift cards, lighting and candles, books, cameras, and novelty products.
