The Accent Group Ltd (ASX: AX1) share price is up more than 2% this morning, after the retailer announced the closure of all its stores in the face of the coronavirus pandemic. Stores will be closed for 4 weeks from 5pm on Friday 27 March. The company says the decision was made with the health and safety of team members a top priority.
Employees stood down
As a result of the closures, all retail employees and the majority of support office employees will be stood down without pay. Employees will continue to accrue entitlements during the period and can access annual and long service leave entitlements. Accent Group will continue to trade through its 18 websites and wholesale business.
Accent Group distributes brands including The Athletes Foot, Hype DC, Sketchers, CAT, Vans, Saucony, Timberland, and Platypus Shoes. The company has more than 420 stores across Australia and New Zealand. Sales of $507.9 million were recorded in 1HFY20, with digital sales growing 33%.
Accent Group opened 51 new stores during the first half of the financial year, including 13 in New Zealand. When it delivered its half year results just over a month ago the company expected to open 70 new stores in FY20. Whether those plans will be fulfilled is now up in the air.
CEO Daniel Agostinelli said:
It is with a heavy heart that we have made this decision, but we believe this to be in the best interests of the health and wellbeing of our team members. The company intends to do everything possible to return the business to normal operations when environmental conditions normalise whilst always prioritising the safety and wellbeing of our team.
Accent Group previously told the market that it had felt the impact of coronavirus and the uncertain conditions it created. Consumer demand has been significantly impacted with sales deteriorating since the middle of February. A significant decline in sales compared to last year was recorded in the first two weeks of March.
Up until mid-February, sales were going well for Accent Group. In the first seven weeks of the second half the retailer recorded low single digit like for like store sales. Profit growth was expected in the 2HFY20. In the period since, the situation has changed dramatically.
A week ago, Accent Group announced like-for-like sales for the first 11 weeks of the second half were down 1.2%. The company said uncertainty around the ongoing impact of coronavirus on consumer demand would have the greatest impact on trading over the next few months. Guidance for profit growth was withdrawn.
Multiple retailers close
Now Accent Group has shut up shop, joining retailers including Mosaic Brands Ltd (ASX: MOZ) and Michael Hill International Ltd (ASX: MHJ). More companies may well choose to close stores with customers’ focused on more pressing issues and health risks increasing.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.