At a time when many retailers shut stores due to a loss in foot traffic accentuated by the pandemic, retail footwear company Accent Group (ASX: AX1) has reported FY22 revenue of $1.27 billion, driven by their aggressive strategy around new store openings.
A return to retail stores in the back half of the pandemic contributed to EBITDA of $213.6 million and net profit after tax of $31.5 million. New store openings and entering the youth activewear segment are laying the foundation for further growth.
While the pandemic disrupted supply chains and retail store operations across the world, Accent managed to remain unaffected to a large extent, partially through their large online presence. Disrupted trading conditions resulted in a loss of around $95 million in 1H22 due to 400 stores closing for four months. Moreover, the gross margin % in FY22 was around 200 basis points less than the gross margin % achieved across FY19 to FY21 due to increase supply chain expenses.
Still, the Group managed to deliver possibly its best shareholder returns performance of nearly a decade over the past two years. It focused on, and invested in, opening new stores, enhancing digital capabilities, growing its customer base, vertical brands and distributed brands, growing Stylerunner (its activewear arm) and repositioning Glue store, a premium retailer.
Accent Group CEO, Daniel Agostinelli, commented, “The operational disruption experienced in the FY22 year, and the associated impact to the financial results, has been well reported.
In the context of the operational challenges and focus that was required to manage the day-to-day business, I am very pleased with the continued progress in executing our growth plan initiatives, and in addition to our customers and suppliers.”
In FY22, the Company witnessed total owned sales of $1.1 billion, up 14.0% from the previous year. As was the case with most brands, as consumers shifted to online buying, Accent Group’s online sales totaled $263.8m million, up 25.7% on the prior year. In fact, online sales contributed to 24.4% of total retail sales in FY22.
What’s notable is that while most companies shut shop owing to Covid-19, Accent Group opened 139 new stores during the year and closed 15 stores where required rent outcomes could not be achieved. The Company opened 19 new Stylerunner stores in the past year while their marquee Glue brand opened 7 new stores and fit out 1 refurbishment. Now, Accent Group boasts a total of 762 stores.
Besides that, the Company’s contactable customer strength grew by 900,000 to 9.3 million customers. Sales of vertical-owned brands were more than $70 million and continue to grow strongly through direct marketing initiatives targeted at these customers.
At least 50 new stores are set to open across the Group in FY23. Accent Group also aims to grow its contactable customer database to 10 million, and the vertical brand and product sales to more than $70 million of sales. It also wants to broaden its global distributed brand portfolio giving the Company a platform for further growth through owned retail, online and wholesale channels.
The first seven weeks of FY23 have, thus far, been positive, thanks to improved trading conditions. Total sales are up nearly 49%, bolstered by the opening and reopening of stores and increased offerings.
Alinda is a Business Reporter for The Sentiment
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