CTC Challenges and Goodwill Impairment Cloud Universal Store’s Strong FY25 Results

FY25 Financial Highlights

Universal Store Holdings Limited (ASX – UNI) delivered a strong financial performance for the fiscal year ended June 2025, with total group sales climbing 15.5% to $333.3 million. Underlying earnings before interest and tax (EBIT) rose 15.9% to $54.6 million, reflecting a combination of sales growth, improved gross profit margins, and effective cost control despite inflationary pressures.

The group’s gross profit margin expanded by 100 basis points to 61.1%, underscoring successful inventory management and a premium pricing strategy that helped offset discounting from competitors. Cost of doing business (CODB) increased slightly to 33.1% of sales, driven by investments in team capability, wage inflation, and higher bonus expenses aligned with stronger trading results.

Segment Performance and Store Expansion

The core Universal Store brand posted a robust 13.0% like-for-like sales growth, a significant rebound from a slight decline in the prior year. The segment opened five new stores and relocated four others, maintaining a network of 84 stores. Online sales also grew by 5.1%, supporting the brand’s multi-channel strategy.

Perfect Stranger, the group’s premium retail format focused on aspirational women’s fashion, expanded rapidly with five new stores, reaching 19 locations by year-end. It achieved an impressive 25.5% like-for-like sales growth and nearly doubled online sales, signaling strong customer traction and brand awareness.

Conversely, the CTC division, which includes the THRILLS and Worship brands, faced headwinds. Wholesale sales declined 13.8%, impacted by key retail account losses and tariff-related export challenges in the US. The group recognised a $13.6 million goodwill impairment charge related to CTC’s wholesale channel performance, although direct-to-consumer sales grew modestly by 2.9%. The CTC retail footprint remained stable with eight stores, and management is focused on revitalising the THRILLS brand and stabilising wholesale operations.

Balance Sheet Strength and Dividend Growth

Universal Store Holdings closed FY25 with a strong balance sheet, holding $17.2 million in cash and no borrowings aside from lease liabilities. The company declared a final dividend of 16.5 cents per share, bringing the full-year dividend to 38.5 cents per share; an 8.5% increase on FY24 and representing an 80% payout ratio on underlying profit.

Outlook and Strategic Priorities

Early trading in FY26 is encouraging, with direct-to-customer sales up 17.2% in the first seven weeks. The group plans to open 11 to 17 new stores across its brands, continuing its measured expansion while prioritising long-term profitability. Investments in team capability, digital infrastructure, and customer experience enhancements remain central to the strategy.

Management also highlighted ongoing efforts to refine product offerings, particularly within the CTC division, and to leverage data analytics and influencer marketing to deepen customer engagement. Sustainability initiatives continue, with certifications achieved for key brands under organic and recycled content standards.