The Accent Group Ltd (ASX: AX1) share price is going nuts as the shoe retailer revealed a strong start to FY23.
Accent is a business that sells a wide variety of shoe brands in Australia including CAT, Dr Martens, Skechers, Stylerunner, The Athlete’s Foot and VANS.
Accent FY23 trading update
It told investors about its performance for the first 18 weeks of FY23.
Total group owned sales in the year to date are up 52% compared to FY22. The FY23 gross profit margin in the year to date is up 570 basis points compared to FY22. This seems like great news for the Accent share price.
The company said that while it won’t provide forward guidance, inventory levels “reflect strong deliveries of exciting new products across all banners, and the group’s in-stock position along with sales and operational plans are well set heading into the three most important trading months of the year.”
Management commentary
The Accent Group CEO Daniel Agostinelli said:
We are very pleased with trade to date which has been above expectations. Our continued focus on driving full price, full margin sales has resulted in strong margin recovery from last year. Our store opening program is on track and we expect to open around 50 new stores in the first half.”
My thoughts on the Accent share price
In FY22, the business finished with 762 stores and it’s aiming to grow this to 812 in FY23.
While most of its revenue comes from selling products from brands it doesn’t own, like Skechers, it has a growing portfolio of brands that it does own. In FY22, it made of $70 million of sales with brands that it owns, representing 7% of total sales. This is helping underlying profit margin growth.
The trading to date has been “above expectations”. I think that’s very promising.
Sales growth and margin growth can be a big boost to the bottom line net profit and also lead to improved dividends.
I think that Accent has a promising future, particularly as the Accent share price has fallen so much this year.
