Best & Less has slashed its profit guidance for the second half of fiscal 2023 by two-thirds, after sales slumped more than 13 per cent.

The company now expects net profit of between $3.6 million and $4.2 million for the first six months of the calendar year, a long cry from the previous guidance of $10 million to $12 million.

Total revenue is forecast to be between $310 million and $315 million.

The company, which is in the midst of a $237 million takeover bid from Brett Blundy, blames necessary heavy discounting for cutting profit margins, as customers tighten their belts further.

For the five weeks from May 15 to June 18, total sales were down 11.7 per cent, down $9 million from the same period in 2022.

Like-for-like sales were down 13.2 per cent. For the year-to-date, like-for-like sales are down 4.5 per cent.

“In-season promotional and discount activity to clear winter stock has been accelerated, and yearly inventory is also being reduced to align Best & Less’s inventory position with current demand and maintain inventory quality,” the company update reads.

“This activity has negatively impacted gross margin in the fourth quarter, which is expected to continue into the first quarter of 2024 as the winter season is closed out. Further expense management initiatives have been implemented to right size Best & Less’s cost base for the conditions, however the full benefit of these actions and lower product and shipping costs will not be seen until the first half of 2024.”