Shares in footwear retail giant Accent Group (ASX: AX1), whose brands include The Athlete’s Foot, Hype DC, Stylerunner, Platypus Shoes, Skechers, CAT, Dr Martens and more, took an almost 10 per cent hit earlier today after a disappointing trading update was released for FY22.
The company's expected earnings before interest and tax (EBIT) in the range of $61 million to $63 million represent roughly half of the $124.9 million achieved in FY21, and are also less than the $94.5 million reported in FY20.
The forecast includes an estimated $7.6 million of one-off, non-cash charges related to the write-down of PIVOT store fit-out costs as well as impairment charges connected to store lease assets in a small number of stores where customer traffic levels have still not recovered.
“The disruption experienced in FY22 has been well reported. Sales across May and June continued to be subdued compared to expectations as we continued our focus on driving full price full margin sales,” Accent Group CEO Daniel Agostinelli said.
“Pleasingly, gross margin rate was ahead of the prior year, and since the back end of June, we are now starting to experience more normal undisrupted trading conditions across most of the store network.
“The first three weeks of FY23 have seen a return to strong deliveries of new product and a positive customer response. Like-for-like sales for this period have been positive albeit against restrictions and store closures in July last year, gross margin rate has also tracked well ahead of the prior year.”
Accent Group currently has more than 700 stores, 33 brands, and 35 online platforms.
Over the past three years, Accent has focused on innovation and growth, opening 104 stores in the first half of the financial year.
However, the group underwent a restructure in April that saw its Australian operations arranged into three divisions and its New Zealand operations consolidated.
The restructure followed Accent’s half-year results, which saw its EBIT drop by 62.9 per cent even though digital sales grew by 47.9 per cent. Trading for the first eight weeks of 2022 was further significantly impacted by reduced customer traffic due to the COVID19 Omicron variant.
Accent reported that the execution of the company’s new growth plan and critical initiatives remain on track, with momentum coming from the Glue and Stylerunner brands.
Shares in Accent Group (ASX: AX1) were down 9.9 per cent today to $1.36 as of 1.16pm, but by 1.50pm they were down 8.8 per cent at $1.382.
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