Accent Group (AX1) H2 2024 earnings summary

Executive summary

• Total sales for FY24 reached AUD 1.61 billion, up 2.7% year-over-year, with owned sales at AUD 1.43 billion, a 3.0% increase, and retail sales up 6.3%.

• Net profit after tax was AUD 59.5 million, down 32.9% year-over-year, impacted by non-recurring charges from store exits and impairments.

• Opened 93 new stores, expanding the network to 895 stores and 32 websites, and grew the customer database by 400,000 to 10.2 million, with loyalty membership at 8.1 million.

• Divested The Trybe business, exited 17 underperforming Glue Stores, and did not renew the CAT distribution agreement to focus on higher-growth banners.

• Performance was resilient amid a challenging consumer environment, with strong results from core brands and growth in new banners.

Financial highlights

• EBITDA was AUD 293.7 million, down 1.5% year-over-year; EBIT was AUD 110.4 million, down 20.5%, including a AUD 17.3 million non-recurring charge for Glue Store exits.

• Gross margin improved to 55.8%, up 60 bps year-over-year, driven by higher retail mix and disciplined inventory management.

• Cost of doing business (CODB) rose to 45.9% of sales, up 140 bps year-over-year, mainly due to inflation in rents and labor costs.

• Net debt at year-end was AUD 122.2 million.

• EPS was 10.6 cents, compared to 16.2 cents in FY23.

Outlook and guidance

• At least 50 new stores planned for FY25 across core and new banners, with continued focus on cost efficiency and gross margin improvement.

• Further growth expected in online sales, loyalty programs, and vertical/distributed brands, including international expansion for Nude Lucy.

• Trading update: first seven weeks of FY25 saw total sales up 8.7% and like-for-like retail sales up 3.5% year-over-year.

• Operational and cost efficiency programs underway, targeting improved CODB performance through FY27.

• Fully franked final dividend of AUD 0.045 per share announced, payable 26 September 2024.