Accent Group Ltd (ASX: AX1) shares are on course to end the week with a disappointing decline.
In morning trade, the ASX 300 share is down 12% to $1.85.
Why is this ASX 300 share being sold off?
Investors have been hitting the sell button today after the footwear-focused retailer released a trading update ahead of its annual general meeting.
According to the release, for the first 19 weeks of FY 2024, total group owned sales (including wholesale sales) were flat compared to last year.
This reflects a 2.1% lift in owned retail sales but a 2% decline in like for like sales over the prior corresponding period.
And while the company's gross margin is broadly in line with the same period last year, the same cannot be said for its cost of doing business (CODB). This appears to be partly why the ASX 300 share is under significant pressure today.
Management advised that although it is focusing on CODB efficiency, due to inflationary pressures on costs and weaker like for like sales, CODB as a percentage of sales is currently higher than the prior year.
While the market is forecasting softer earnings from Accent in FY 2024, it may now believe that this means its earnings will fall far more than expected.
The ASX 300 share's CEO, Daniel Agostinelli, said:
Retail sales for the first 19 weeks have continued to be broadly in line with the -1.8% LFL experienced in the first 7 weeks. Wholesale sales have been more challenging, reflecting softer demand from other retailers. Our new store opening program is on track and we now expect to open 70 new stores in H1 FY24, with many of them opening across November and December. The Group's in-stock position along with sales and operational plans are well set heading into the three most important trading months of the year.