The Accent Group Ltd (ASX: AX1) share price is surging today, up 10.29% at the time of writing. Accent shares opened at $1.41 this morning after closing at $1.36 yesterday, but have surged to $1.50 a share in afternoon trading. The shares are now up more than 170% since the lows of 56 cents we saw in March.
Why the Accent share price is galloping higher
The catalyst for today’s move appears to be an ASX release from the company this morning before the market opened. In this release, Accent gave notice that it is expecting FY20 earnings before interest, tax, depreciation and amortisation (EBITDA) to be “around 10% above” the $108.9 million that was seen in FY19.
The company also reported that as of the week ending 21 June, total FY20 sales are sitting at $923 million.
Pleasingly for Accent, digital sales for the company between April and June 2020 were up 150%. As Accent closed all of their physical stores on 27 March, reopening on 11 May in Australia and 22 May in New Zealand, these numbers are very encouraging for shareholders. The company also reported digital sales made up 23% of total sales in the month of June so far (up to 21 June).
Also noted were strong sales in New Zealand, Western Australia, South Australia, Queensland and regional areas. These areas have apparently rebounded much stronger than Sydney and Melbourne metropolitan sales.
Accent Group CEO, Daniel Agostinelli had this to say on the numbers:
“The strong trading performance over the last 2 months driven by digital has been well ahead of expectations. It is clear that there has been a seismic and most likely enduring shift in consumer behaviour. With 18 websites and our leading digital capability, Accent Group is capitalising on this trend. Through this period Accent has attracted many new customers online who have never shopped with us before. We will continue to drive digital growth as the number one priority in our company.”
Accent also praised the positive impact of the government’s JobKeeper program throughout the coronavirus situation. The program enabled Accent to scale its staff down and back up efficiently during the lockdown period.
Despite today’s positive share price movements, Accent shares are still 18% below the levels they started 2020 at and around 30% its February highs.
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Motley Fool contributor Sebastian Bowen 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.
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