Image source: Lemonsoup14

Highlights

  • Driven by an increasing mix of distributed and owned vertical brands, AX1’s gross margin increased by 140 basis points annually to 56.6% in H1FY24
  • The company is witnessing increased occupancy and store team costs in H2FY24
  • The company plans to open 20 new stores in H2FY24 in both core banners and new businesses

Accent Group Ltd (ASX: AX1) is a digitally integrated footwear retailer and distributor, with 786 stores and 35 websites. The company holds distribution rights for 17 international brands in Australia and New Zealand.

In the first half of FY24, sales of AX1 dipped by 1.74% annually, as there were 26 weeks in H1FY24 versus 27 weeks in H1FY23. However, the company’s gross margin increased by 140 basis points annually to 56.6% due to an increasing mix of distributed and owned vertical brands. The group opened 72 new stores during H1.

Top 10 shareholders

The top 10 shareholders of AX1 have around 37.87% shareholding in the company, with the maximum stakes held by Blundy (Brett) and Thompson (Craig John) with a shareholding of ~14.65% and 5.72%, respectively.

Recent business update

By the end of January 2024, the company observed a 1.6% year-to-date increase in total owned sales, with retail sales up by 5.6%, showcasing the impact of new store launches. However, LFL retail sales for the initial seven weeks of H2FY24 (1 January 2024 to 18 February 2024) declined by 0.7% YoY.

Aligned with H1, the company’s gross margin percentage has exceeded that of last year. Further, the company is witnessing increased occupancy and store team costs in H2FY24.

Company outlook

The company intends to launch 20 new stores in H2FY24 in both core banners and new businesses. Over the next 18 months, it is planning to open more than 10 new stores of Stylerunner and Nude Lucy, which is a profitable brand. The company launched an exclusive loyalty relationship with Qantas in November 2023. The company is expecting this to drive customer visits and spending frequency.

Share performance of AX1

The stock price of AX1 has declined by ~10.71% in the last 3 months, whereas over the last 1 year, the stock price has dipped by ~27.61%. The stock’s 52-week low and 52-week high price stands at AUD 1.510 and AUD 2.610, respectively. It is currently trading lower than the mid-point of its 52-week low and high. Its closing price as of 23 April is AUD1.885.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 23 April 2024. The reference data in this report has been partly sourced from REFINITIV.