The Accent Group Ltd (ASX: AX1) share price has rocketed high this morning after the footwear retailer released an eye-opening update.
At the time of writing the company’s shares are up a massive 22% to $1.10.
What did Accent announce?
Like many retailers, Accent closed its doors last month in an effort to prevent the spread of the coronavirus.
Since then the company has seen a significant acceleration in digital sales. So much so, Accent was forced to progressively open stores over the last few weeks and operate them as “dark stores” which were not open to the public.
In fact, all Accent’s Australian stores are now operating as dark stores and assisting with online orders.
And it isn’t hard to see why. Prior to its stores closing in March, Accent was recording $250,000 worth of Digital sales per day. Whereas over the last two weeks of April its daily Digital sales have been between $800,000 and $1.1 million.
Seismic and enduring shift to online.
Accent Group’s CEO, Daniel Agostinelli, believes this impressive growth in Digital sales reflects the years of investment it has made in this side of the business.
Mr Agostinelli said “After years of investment by Accent Group in our digital team and technology, I am delighted with the growth in our digital sales. It is clear that there has been a seismic and most likely enduring shift in consumer behaviour away from traditional shopping centres to shopping online. With 18 websites and our leading digital capability, Accent Group is capitalising on this trend. We will continue to drive digital growth as the number one priority in our company.”
Re-opening of stores.
In addition to this, the company revealed that it has made the decision to progressively re-open all its stores. This will be with new safety protocols in place that comply with all Government directives and prioritise the health and safety of its team members and customers.
Though, the company warned that it doesn’t expect retail foot traffic to rebound immediately. As a result, it is attempting to negotiate reductions in its rent.
Accent is seeking for rent to be calculated by reference to a percentage of sales. It feels this is the fairest method of ensuring that losses are shared proportionately between landlords and tenants over the coming months.
Mr Agostinelli: “We believe that the significant increase in our online business most likely marks a permanent shift in consumer habits in Australia and New Zealand and we expect our online sales to represent a much larger share of our total sales in the future.”
“Our store network, along with our surging online business, is a fundamental competitive advantage to the Company, however we will not operate stores on unsustainable or uneconomic rental deals. Accordingly, in the coming months, we will be re-evaluating the location, size and format of our store network to ensure the appropriate balance between digital and store sales,” he commented.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Accent Group and REDBUBBLE FPO. 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.