The Accent Group Ltd (ASX: AX1) share price is down over 10% after the shoe retailer revealed a FY24 trading update.
Accent is the Australian distributor of a number of global shoe brands including Kappa, Skechers, Vans, CAT, UGG, Hoka and Dr Martens. It owns some businesses including The Athlete’s Foot, Glue Store and Nude Lucy.
Trading update hurts Accent share price
Accent revealed how its trading has gone for the first 19 weeks of FY24.
Total group owned sales (including wholesale sales) were “flat” compared to FY23. Total owned retail sales were up 2.1%. The company said that like-for-like sales were down 2%, so store openings are helping the overall sales numbers.
Thankfully, the company said that the FY24 gross profit margin percentage is “broadly in line” with the comparable period last year.
Accent said that it continues to focus on efficiencies relating to the cost of doing business (CODB). Due to “inflationary pressures” on costs and weaker like-for-like sales, the cost of doing business percentage compared to sales to the end of week 19 of FY24 is higher than the prior year.
Management commentary
The Accent CEO Daniel Agostinelli said:
Retail sales for the first 19 weeks have continued to be broadly in line with the -1.8% LFL experienced in the first 7 weeks. Wholesale sales have been more challenging, reflecting softer demand from other retailers. Our new store opening program is on track and we now expect to open 70 new stores in H1 FY24, with many of them opening across November and December. 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.
Is the Accent share price an opportunity?
The company is a strong retailer, and there may be some pain in the next 12 months.
With the Accent share price now down more than 25% from its 52-week high, I think it could be a longer-term opportunity. It could continue to be a solid pick for dividends in the long run too. It can be useful to take a contrarian approach to sold-off retailers with a multi-year timeframe.
