The Accent Group Ltd (ASX: AX1) share price has declined 15% after giving investors an update at its AGM.
Accent sells shoes in Australia through a variety of different brands including The Athlete’s Foot, Glue Store, Platypus and Stylerunner. It also sells international brands like Ugg, Vans, Timberland, Merrell, Hoka, Henleys, Skechers and Dr Martens.
FY25 update
After telling investors how the 2024 financial year went, the shoe retailing business revealed how it had performed in the first 20 weeks of FY25 compared to the same period in FY24.
It said that total group-owned (businesses it owns) sales were up 6.8% and like for like (LFL) sales for the first 20 weeks were up 3.5%.
However, while sales were up, the FY25 gross profit margin in the financial year to date had dropped by 70 basis points (or 0.70%) compared to the same period last year. It was impacted by a “more promotional trading environment”.
Accent also told investors how its costs had performed. Its cost of doing business (CODB) as a percentage of sales for the first 20 weeks of FY25 was “starting to gain traction”, with the CODB to sales ratio showing a “small” improvement compared to last year. This includes the impact of restructuring costs with the support team.
Another positive was that the company revealed its store opening program is on track, with around 40 new stores expected to open in the first half of FY25. The company has closed eight stores out of a planned 17 underperforming Glue Stores,
Accent also said its in-stock position, along with sales and operational plans, are “well set” heading into the largest trading months of the year.
Frasers update
In August, the ASX retail share announced that Frasers Group plc had acquired a 14.65% strategic shareholding of Accent. It’s one of the world’s largest owners and retailers of sports, premium and luxury brands.
The Accent board intends to appoint Dave Forsey to the Accent board at the end of the AGM on 21 November 2024. He’s a former CEO of Sports Direct and the current general manager of APMEA (Asia Pacific, Middle East and Africa) for Frasers
Final thought on the Accent share price
It’s not surprising that there may need to be more discounting in the current environment with some households struggling under economic pressures.
I wouldn’t call it a huge bargain, but I do think it’s much more appealing than before. Some retailers are quite cyclical, and hopefully there is a recovery within the next year or two for earnings if interest rate cuts help consumers’ finances.
For now, there are other ASX dividend shares that could make better investments, in my eyes.
