The Universal Store Holdings Ltd (ASX: UNI) share price reached record highs yesterday after releasing a positive trading update.
Since listing on the ASX last year at $3.80 per share, the retailer’s market valuation has increased by over 100%.
UNI share price
Positive trading update
The catalyst behind yesterday’s jump in the Universal share price was the release of an investor presentation with a Q3 FY21 trading update.
The results confirmed the continued upward trajectory of the business and reported like-for-like (LFL) physical store and online sales growth of 27.5% and 148.2%, respectively, on the prior corresponding period (pcp).
Looking ahead at Q4, management seems to be confident but noted that its comparative sales figures are likely to become less meaningful due to the store closures that occurred around this time last year.
Even though all stores had been reopened by 11 May 2020, foot traffic levels remained depressed for quite some time, especially in the CBD stores and other tourist areas.
Future growth drivers
Management plans to grow its store network to over 100 stores (currently 65) across Australia and New Zealand, but this is just one of many of its growth drivers.
Universal also plans to grow market share by ramping up its existing stores, further enhancing its online channel, optimising its product mix and the expansion of its private brands.
Private brand sales as a proportion of total sales have been gradually increasing over the past years and are sold on a much higher gross margin compared to third party brands.
Universal says private brands complement and complete customer outfits. If management executes, it should result in a higher proportion of private brand sales, which will support further margin expansion as the business scales.
Time to buy Universal’s shares?
I think Universal’s shares could be one for the watchlist.
Past financial data is fairly limited, but it seems the company has demonstrated some consistent revenue and profit growth over the last several years. Retail is a challenging space to be in, but the store has a positive reputation with products that are generally well-liked by its target demographic.
For some more reading on Universal shares, click here to read: Universal Store (ASX: UNI) debuts on the ASX… Time to buy shares?
I’d also suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.
