Accent Group Limited - AGM Trading Update - 21 November 2024
AX1 (AX1) Share Update November 2024 Wednesday 20th
Accent Group Reports Positive Sales Growth Amidst Margin Pressures
Accent Group Limited (ASX: AX1) has released its AGM trading update, highlighting a 6.8% increase in total sales for the first 20 weeks of FY25, alongside strategic changes and challenges in maintaining gross margins.
Instant Summary:
- Total Group sales up 6.8% for the first 20 weeks of FY25.
- Like-for-like retail sales increased by 3.5%.
- Gross margin down by 0.7% due to promotional trading environment.
- 40 new stores expected to open in H1 FY25.
- Closure of 17 underperforming Glue stores is on track.
- Appointment of Dave Forsey to the Board post-AGM.
Sales Performance
Accent Group Limited has reported a 6.8% increase in total Group sales, including wholesale, for the first 20 weeks of the fiscal year 2025. This growth is driven by a 3.5% rise in like-for-like retail sales, indicating a positive response from consumers to the company's offerings. However, the gross margin has experienced a decline of 0.7% compared to the previous year, attributed to a more promotional trading environment.
Operational Developments
The company is on track with its new store opening program, expecting to launch around 40 new stores in the first half of FY25. Additionally, the divestment of The Trybe was successfully completed in August, and the transition to new ownership is now finalized. The strategic closure of 17 underperforming Glue stores is progressing as planned, with 8 stores already closed.
Strategic Partnerships
Accent Group is actively engaging with Frasers Group regarding future strategic opportunities. In line with this, Dave Forsey, a former CEO of Sports Direct and current Frasers GM for the APAC region, will join the Accent Board following the conclusion of the 2024 AGM. This appointment is expected to strengthen the company's strategic direction and governance.
The increase in sales is a positive indicator for Accent Group, suggesting strong consumer demand and effective promotional strategies. However, the decline in gross margin highlights the challenges of maintaining profitability in a competitive retail environment. The strategic decisions to open new stores and close underperforming ones demonstrate a focus on optimizing the company's retail footprint.
Investor Reaction:
Analysts may view the sales growth positively, but concerns about margin pressures could temper enthusiasm. The appointment of Dave Forsey is likely to be seen as a strategic move to enhance leadership and explore new opportunities with Frasers Group.
Conclusion:
Investors should consider Accent Group's sales growth and strategic initiatives as signs of potential long-term value. Monitoring the company's ability to manage margins and capitalize on strategic partnerships will be crucial for future success.