The Accent Group Ltd (ASX: AX1) share price is in focus after the business revealed a weak trading update.
Accent owns a number of retail businesses including The Athlete’s Foot, Platypus and Stylerunner. It also sells global brands locally, such as Vans, Ugg, Skechers and Hoka.
Weak trading update
The footwear retailer gave an update regarding the second half of FY25.
It said that trading conditions have continued to be challenging in the second half, with low overall growth in the lifestyle footwear market between March to early June. This has impacted sales in both the retail and wholesale segments.
The current “promotional environment”, along with a disciplined focus on managing inventory levels in a lower sales environment is continuing to put pressure on the company’s gross profit margins.
Accent revealed that its like for like (LFL) sales, which generally ignores recently opened stores, for the 23 weeks to 8 June 2025 were down 1%. Like for like sales in the second half weeks of 8 to 23 were down 2.5%.
Profitability
The ASX retail share also reported that its gross profit margin in the second half of FY25 to date was down around 80 basis points (0.80%) compared to the same period last year.
Management are now expecting the business to deliver overall EBIT (EBIT explained) for the full-year ended 29 June 2025 to be in a range of between $108 million to $111 million.
Final thoughts on the Accent share price
Investors usually don’t like seeing a business report that trading conditions are weak and profit margins are falling because that can impact how much they believe the business is worth.
As a discretionary retailer, I think it’s normal for a business to go through weaker conditions sometimes. Times like this can be buying opportunities for brave investors willing to wait until times get better.
It’s hard to say when consumers’ finances and confidence will improve, but I think this could be a turnaround opportunity.
