The Accent Group Ltd (ASX: AX1) share price is on watch today following the release of the company's full year financial results.
Accent Group is a retailer and also a distributor of performance and lifestyle footwear. The group has over 500 stores across Australia and New Zealand. Accent has exposure to the fast growing active footwear market through brands that include Hype DC, Platypus, and The Athlete's Foot.
Modest overall growth in challenging market conditions
Investors will be watching the Accent share price this morning after the company revealed total sales reached $948.9 million for the 12 months to 20 June 2020. That's up 1.5% on the prior 12 month period. Earnings before interest, taxes, depreciation and amortisation (EBITDA) grew more strongly, up by 11.8% during the year to $121.7 million. Meanwhile, EBIT for Accent was up by 8.2%, while net profit after tax (NPAT) came in at $58 million. That was an increase of 7.5%.
Within the core retail market, major brands including Platypus, Hype DC, Skechers, Vans as well as Dr Martens recorded gross margins more or less in line with the prior year.
The Accent Group opened 57 new stores during the 12 month period, while 12 stores were closed. Sales in vertical product and brands gained strong momentum. They rose to $13 million, more than double the prior year.
The group announced a final dividend of 4.0 cents per share fully franked.
Online sales for Accent surge by 69%
The real winner for Accent during the last 12 months has been its online channel.
Total digital sales for FY 2020 climbed by 69% on the prior year. They now represent 17% of total sales for Accent. This is quite significant for a mainstream bricks and mortar retailer in Australia.
It was during the fourth quarter when digital sales really soared for Accent due to the coronavirus pandemic restrictions. During this final quarter for FY 2020, online sales grew by a massive 142% and represented 35% of all sales. Over 50% of online customers in the fourth quarter had never shopped at Accent Group before.
Accent Group CEO, Daniel Agostinelli, said "Given the challenging environment, we are pleased to report that Accent Group has delivered another record year. …. Key to this result was the integrated digital capability the Company has built over the last 3 years, which enabled us to connect with our customers and shift our channel mix from stores to digital when all stores were closed in April. Driven by this strong digital growth, retail sales, gross profit and resultant operating profit in May and June were significantly ahead of the prior year.."
Digital channel leads growth strategy for FY 2021 and beyond
Accent has an ambitious growth plan in place targeting at least 30% of sales to be delivered by the digital channel. During FY 2021, the group has in its pipeline the opening of 30 to 40 new stores. The Pivot brand in particular will see strong expansion, with the rollout of 12 new stores and an emphasis on growing online sales.
In a trading update, Accent noted that like-for-like retail sales across Australia and New Zealand grew by 1.3% during the first 8 weeks of FY 2021.
The Accent share price closed yesterday at $1.66.
