A shift to online has put a spring in the step of footwear retail company Accent Group (ASX: AX1), pushing up digital sales in the June quarter by 150 per cent.
The group, which owns the Australia-New Zealand distribution rights to footwear brands like The Athlete's Foot, Stylerunner, Skechers, Vans and Dr. Martens, is now forecasting a 10 per cent lift in EBITDA to almost $120 million for FY20.
However, FY20 final operating profit below the EBITDA line is expected to include a non-cash impairment of assets of $3-4 million on several store and other assets where revenue has been impacted by the current environment.
The outbreak of COVID-19 and associated restrictions forced Accent to close down 470 stores in March, but demanad for active footwear and apparel as well as Skechers' range for health professionals contributed to a quadrupling of online sales.
All of Accent's stores in Australia had opened by 11 May, and the same was true in New Zealand by 22 May, but there has now been a "seismic and most likely enduring" shift to digital.
While customers had physical store options at their disposal the company still achieved a new daily record of $2 million in digital sales during the Click Frenzy event from 19-22 May.
Digital sales in May reached $29 million, while this month they are currently accounting for around 23 per cent of revenue.
"The strong trading performance over the last two months driven by digital has been well ahead of expectations," says Accent Group CEO Daniel Agostinelli.
"It is clear that there has been a seismic and most likely enduring shift in consumer behaviour. With 18 websites and our leading digital capability, Accent Group is capitalising on this trend.
"Through this period Accent has attracted many new customers online who have never shopped with us before. We will continue to drive digital growth as the number one priority in our company."
In general, sales in New Zealand, Western Australia, South Australia, Queensland and regional areas have bounced back more strongly than the metro centres in Melbourne and Sydney.
Accent Group reports the customer trend towards activewear and performance running continues to remain very strong in Stylerunner and The Athlete's Foot, with a broad-based recovery in spend across all banners and product categoriesthrough May and June.
The company's sales in May and June (to week 51) have been strong with like-for-like sales up 7 per cent, and at the start of this month the group stood up all its 1,500 permanent employees to full employment and full pay, which enabled a further acceleration of sales results in June.
Successful negotiations have also been concluded with landlords and Accent has continued to pay rent.
"We are committed to maintaining our position as the largest multi-channel footwear retailer in our market," says Agostinelli.
"The mix of Accent's superior digital capability and the magic of our stores gives us a key competitive advantage, but it is important that we reach agreement with our landlords for sustainable and fair rental deals.
"With landlords where this cannot be achieved, we will close stores. We are delighted to report that to date we have been able to reach agreement with the vast majority of our major and independent landlords."Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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