The Accent Group Ltd (ASX: AX1) share price is down 10% after reporting its FY24 result.
Accent sells a variety of shoe brands including Skechers, Hoka and Vans. It owns some of its own businesses such as The Athlete’s Foot (TAF), Stylerunner and Nude Lucy.
Accent FY24 result
Here are some of the main highlights from the result for the 12 months of the 2024 financial year:
- Total sales (including TAF franchises) up 2.7% to $1.61 billion
- Owned sales increased 3% to $1.43 billion
- EBITDA fell 1.5% to $293.7 million
- EBIT declined 20.5% to $110.4 million
- Net profit after tax (NPAT) sank 33% to $59.5 million
- Final dividend of $0.045 per share
- Full-year dividend down 26% to $0.13 per share
Other financial highlights
Accent reported like for like (LFL) retail sales growth of 1.7% for the year. Retail sales growth was supported by the continued strong performance of its online sales, which levered the company’s “integrated omnichannel capability”.
Pleasingly, the business reported its gross profit margin was 55.8%, up 58 basis points (0.58%).
However, costs increased, with the cost of doing business (CODB) rising to 45.9% (up 138 basis points (1.38%)) due to inflation of store rents and wages. However, CODB improved in the second half thanks to a range of ongoing cost efficiency initiatives including lease renewals, support office team costs, distribution and other store costs.
It has initiated a further cost review which is planned to help the CODB ratio across FY25 to FY27.
Stores and brands
During the year, the business opened 93 new stores and closed 19 stores where required investment/profit returns could not be achieved. It decided to exit 17 underperforming Glue stores (expected to close by early 2025), with the remaining business expected to be profitable in FY15.
It now has 895 stores (including websites). New store performance remains “strong” with sales, profit and return metrics in line with expectations.
The company noted its decision not to renew TAF franchise agreements at expiry and explore the re-acquisition of the remaining 60 franchise territories over the next five years. Three TAF franchises were acquired.
The Trybe business has been sold, to focus on the company’s core and growth brands.
Accent said the CAT distribution agreement will not continue beyond expiry in December 2024. This was “small” relative to other businesses. The six remaining stores will close throughout FY25.
Outlook for the Accent share price
The company said it’s continuing to roll out new stores. An additional 50 new stores are planned for FY25.
It’s also expecting an improved underlying gross profit margin, growth with Nude Lucy (including the launch of a US online store, profit margin expansion for TAF, and growth from current and new distributed brands. Skechers, Hoka and Ugg are a particular focus.
In the first seven weeks of FY25, total sales are up 8.7%, while LFL retail sales are up 3.5% year over year.
While the Accent share price is down, it’s only back to where it was a week ago, so it shouldn’t be seen too negatively. I think the rebound of sales growth in early FY25 is a positive, and the company is planning more growth. However, I wouldn’t say it’s a great buy today considering it has rallied from the various lows of the past two years. I like buying cyclical stocks, like retailers, when investors are fearful.
