Footwear group Accent has defied the retail crunch with a profit upgrade

Accent Group
  • Footwear retailer Accent Group announced a profit guidance upgrade.
  • It now expects earnings for 2019 to be 15% to 20% ahead of last year.
  • The company, which has 420 stores, had been targeting mid-single digit growth.

Footwear retailer Accent Group, the operator of Athlete’s Foot and other brands, just issued a profit upgrade, saying sales are tracking higher as it expands its store network.

The company now expects earnings for the 2019 financial year to be 15% to 20% ahead of last year, up on its original forecast of mid-single digit growth.

Accent says like for like sales in the first 20 weeks of the year are up 2.5% and tracking to expectations.

Most bricks and mortar retailers are being challenged by increasing digital competition and low consumer sentiment.

CEO Daniel Agostinelli says if sales continue to track at low single digit growth, EBITDA (earnings before interest, tax, depreciation and amortisation) for the first half is now expected to be between 15% to 20% higher than last year.

“We are delighted with the results achieved for the first 20 weeks of FY19,” he told the AGM.

“Whilst we still have a significant proportion of the H1 and annual EBITDA to achieve in the key Christmas and back to school periods through December and January, our operational plans are well set for this trading period.”

Accent has 420 stores under 10 different retail banners and exclusive distribution rights for 10 international brands across Australia and New Zealand.

The brands include Athlete’s Foot, Hype DC, Platypus Shoes, Podium Sports, Skechers, Merrell, CAT, Vans, Dr. Martens, Saucony, Timberland, Sperry Top-Sider, Palladium, and Stance.

Accent says its getting continued margin improvement through increasing vertical brands penetration, new emerging brands and reduced discounts.

Digital growth has been stronger than expected, up 88% on prior year,

The company plans to open more stores with more than 40 now targeted to open in the 2019 financial year, up from 30 stores originally planned.

Accent Group

New stores opened so far are trading ahead of expectations.

The company says its gross margin for the year to date is stronger than expected and more than 300 basis points ahead of last year.

In August the company posted full year revenue of $703.18 million, up 10.5%. Net profit was 50% higher at $43.96 million.

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