Footwear retailer Accent Group tramples past woes with profit spike

Footwear retailer Accent Group tramples past woes with profit spike

With profit growth guidance above 40 per cent for the December half, the shoe is now well and truly on the other foot for retailer Accent Group (ASX: AX1) which just over 10 months ago had to temporarily shut down 470 stores in response to COVID-19.

An expected EBITDA of $95-98 million announced today represents 40-45 per cent growth on the second half of 2019, with record digital sales as well for the group that is responsible for brands ranging from Stylerunner to Hype DC to Vans in Australia and New Zealand.

In an update this afternoon the group reported digital sales were up 110 per cent to $108.1 million for the six months to 27 December, meaning the category now makes up more than a fifth of total sales.

Meanwhile, sales outpaced expectations in November and December with total sales up by 12.3 per cent and like-for-like sales up 7.4 per cent.

The positive expectations come despite the impacts of shutdowns in Victoria, Auckland, Adelaide and more recently in Sydney's Northern Beaches, with Accent highlighting its permanent employees have remained on full pay despite significant store traffic levels in these areas.

The company estimates the net benefit of wage subsidies in H1 FY21 was $9.4 million.

"I am delighted with the way our team has executed through the all-important November cyber events and the lead up to Christmas," says Accent Group CEO Daniel Agostinelli.

"Our strong focus and capability in digital, combined with operational excellence in merchandise and store execution has delivered a strong, trading led result.

"The Company's store network and best in class digital fulfilment capability, allowed us to fulfill significant volumes of online Christmas customer orders placed up until 22 December in time for Christmas Day."

Agostinelli points to a growth initiatives progressing across the board, with a focus on "Virtual, Vertical and VIP".

"We are well set for the significant back to school trading period across our digital, virtual and store sales channels," says Agostinelli.

Despite the encouraging result, the ongoing uncertainty relating to COVID-19 has led Accent to not provide guidance for the second half or the full year.

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