Fashion retailer Accent Group to cut Glue Store location count in half

The ASX-listed fashion retailer responsible for such brands as Platypus, Skechers and Hype in Australia has announced it will be exiting 17 underperforming Glue Store locations, which will negatively hit earnings by $14.2 million as the brand's store presence is cut in half. 

Accent Group (ASX: AX1) announced today that exiting these stores would mean the Glue Store business will comprise of 18 stores including its digital shopfront, and is expected to be profitable this financial year.

The charge against its bottom line is more than the $13 million Accent Group paid for Glue Store in 2021 along with a string of other brands such as Nude Lucy, Beyond Her, Lulu & Rose and Article One.

At that time Glue's retail business comprised of 21 stores, including Nude Lucy which alone has grown its footprint to more than 30 stores today. 

If it weren't for the negative charge from Glue Store, Accent would be anticipating FY24 EBIT of $123.2-125.2 million, the upper bound of which is just 10 per cent lower than an FY23 result that more than doubled year-on-year to $138.8 million.

This compares to a 20 per cent drop in EBIT for the December half, which may explain why AX1 shares have been buoyant this morning, rising 7.91 per cent to $2.115.

Including the charge, Accent is forecasting an EBIT of $109-111 million.

"Trading conditions across the group in H2 FY24 improved on H1 FY24, with LFL sales in H2 4.1 per cent ahead of prior year. For the full year, total LFL sales are up +1.7 per cent on FY23," says Accent Group CEO Daniel Agostinelli.

"I am pleased with our retail performance in H2 where the Company continued to experience strong momentum in Skechers, The Athlete’s Foot, Hype DC, Stylerunner, Nude Lucy, and Hoka amongst others.

"The decision to exit the 17 underperforming stores will allow the Glue Store management team to focus on a profitable business comprising 18 stores including digital."