Accent Group steps up with record $76.9m profit

An Australian footwear retailer with distribution rights for some of the world's leading brands has laced up its fourth consecutive year of record profit in FY21 despite the impacts of lockdowns, opening 90 stores and treading into new territory with the acquisition of youth apparel retailer Glue.

Hype DC, Skechers, Platypus, The Athlete's Foot and Trybe were the standout performers in Accent Group's (ASX: AX1) store retail sales of $835.4 million, representing growth of 19.6 per cent.

Total online sales soared by 48.5 per cent to $209.9 million and wholesale sales contributed $132.3 million, but the sharpest rise was in net profit after tax (NPAT) up 38.6 per cent to $76.9 million.

"Given the disruption to the business and the impact of the 14 separate lockdowns that occurred through-out the year, I am delighted with the FY21 results," Accent Group CEO Daniel Agostinelli said.

"The acquisition of the Glue store business to form our new Accent Lifestyle division was a key highlight for the year and I couldn’t be more pleased with the quality of the business and the progress that has been made in the first 90 days.

"I am also pleased to report that in August we signed an early renewal of our key Skechers distribution license for a further six years to extend this licence from 2026 to December 2032."

The group received $24.5 million in JobKeeper wage subsidies for the financial year, which if subtracted from earnings before interest and tax (EBIT) gives a result of more than $100 million - a 15 per cent uptick year-over-year.

Accent reports its underlying EBITDA, adjusted for JobKeeper and subsidies paid directly to team members, was up 21.6 per cent at $109.5 million.

Accent chairman David Gordon explained the group continued to focus on the safety and wellbeing of its team and customers.

"During the year we kept our permanent team members in full employment and on full pay through the 14 occurrences of government mandated restrictions/lockdowns and related store closures that occurred throughout the year, which saw all JobKeeper funds fully utilised by July 2021," Gordon said.

"Despite such a challenging year we created 300 new permanent roles across our stores and businesses.

"Consistent with our policy, no JobKeeper funds have been used in the calculation or payment of management bonuses or shareholder dividends."

Executive remuneration for FY21 rose by 14.6 per cent to more than $6 million, mostly as a result of higher share-based payments. AX1 shares had practically doubled in the 12 months to 30 June 2021.

Even though the headline figures were positive today, AX1 shares were down 3.42 per cent at $2.26 each, likely due to its confirmation that like-for-like sales were 16 per cent lower in the first seven weeks of FY22.

Lockdowns at various times in July and August have impacted sales in more than 350 stores out of its 638-strong network, although digital sales have continued to grow over the last three weeks with a 66.7 per cent rise with New South Wales and Victorian stores largely closed.

Accent group estimates the EBIT impact due to the COVID related disruption experienced across the months of July and August will be at least $15 million in the negative compared to management expectations prior to the lockdowns. This is due to the impact to gross margin of driving sales and ensuring that inventory levels are appropriately managed.

In light of this situation the group is not providing forward sales or profit guidance for FY22, but management believes it is in a strong position with a flexible and resilient business model, a database of 8.4 million contactable customers, a strong balance sheet and conservative gearing levels.

"Our portfolio of world class owned and distributed brands, integrated digital capability and large store network are core assets of the group and position the company well for strong growth into the future," Agostinelli said.

"In the current environment our digital sales are growing strongly and we have confidence that when stores can re-open, we are well positioned to serve our customers and to continue to grow our position in the market.

"The acquisition of Glue store and progress underway building the Stylerunner and Exie brands, along with delivering a strong Australian presence in the active and youth apparel markets, also provide the opportunity for further international growth in New Zealand and other markets over the coming years."