Accent Group (AX1) H1 2025 earnings summary

Executive summary

• Net profit after tax for H1 FY25 increased 11.7% to $47.2 million, with EBIT up 11.5% to $80.7 million, driven by new store openings, strong vertical brand growth, and cost efficiencies.

• Total sales, including franchisees, reached $845 million, up 4.2% year-over-year, with 42 new stores opened, bringing the network to 903 stores.

• Contactable customer database reached 10 million, with loyalty program membership at 8.1 million.

• Interim fully franked dividend of 5.5 cents per share declared for H1 FY25, payable 20 March 2025.

• Frasers Group plc acquired a 14.65% strategic shareholding in August 2024.

Financial highlights

• Gross margin declined 100 basis points to 55.6% due to a more promotional environment.

• Owned retail sales grew by $5.1 million to $683.5 million, with LFL retail sales up 2.9% and wholesale sales up 1.3% to $83.4 million.

• EBITDA rose 0.5% to $158.3 million; net profit margin was 5.6% for H1 FY25.

• Net working capital increased to $137.4 million, reflecting higher inventory for store expansion; net debt stood at $115.9 million as of 29 Dec 2024.

• Basic and diluted EPS were 8.35 cents, up from 7.55 and 7.51 cents respectively year-over-year.

Outlook and guidance

• At least 10 new store openings planned for H2 FY25, with continued focus on profitable banners and store refurbishments.

• LFL sales for the first seven weeks of H2 FY25 up 2.2% year-over-year; gross margin down 70 basis points.

• Ongoing negotiations with Frasers Group for a long-term strategic agreement, expected to conclude in H2 FY25.

• Focus remains on improving gross margin through a higher mix of distributed and owned vertical brands.

• Board reiterates intent to pay out excess cash not required for investment.