The Accent Group Ltd (ASX: AX1) share price has soared 9% today after announcing a profit update for FY24.
Accent sells a large array of shoe brands, including numerous global brands that the company has distribution agreements with like Vans, Ugg, Skechers, Hoka, Henleys and more. The company also has some of its own businesses including The Athlete’s Foot, Stylerunner, Nude Lucy and Glue Store.
FY24 update
Accent reported it’s expecting its FY24 EBIT (EBIT explained) to be in a range of $109 million to $111 million.
However, those numbers also include a charge in the FY24 second half of $14.2 million related to Glue Store, so the company has decided to exit 17 underperforming stores where “required returns are not being achieved.” This will result in Glue Store’s network halving in size, which is expected to be profitable in FY25.
Excluding that Glue Store charge, the FY24 EBIT is expected to be in a range of between $123.2 million to $125.2 million. This seems to have excited investors about the Accent share price.
Management commentary
The Accent Group CEO, Daniel Agostinelli, said:
Trading conditions across the Group in H2 FY24 improved on H1 FY24, with LFL sales in H2 4.1% ahead of prior year. For the full year, total LFL sales are up +1.7% on FY23.
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.
Final thoughts on the Accent share price
While it’s not good to see that Glue Store has been underperforming, the overall business is seeing better trading conditions and this could mean good news for longer-term profit.
The business is increasing its overall store count, and focusing on being profitable, which I think is good for shareholders. It may also be help for the dividend.
It’s not as cheap as it was yesterday, but the market still isn’t pricing a strong recovery. But, if like for like sales growth continues into FY25 in the mid-single digits, then the outlook could be promising for the ASX retailer.
