The ASX dividend share Accent Group Ltd (ASX: AX1) has gone through a sizeable sell-off, as the below chat shows – it's down around 40% this year. However, I think this is an excellent time to buy a beaten-up stock with much more growth potential than the market is giving it.
Accent is best known as a footwear retailer. It acts as a local distributor for a wide range of global brands including Skechers, Vans, Ugg, Hok, Dickies, Lacoste, Herschel, Saucony and plenty more. It also owns businesses itself including Glue Store, Stylerunner, The Athlete's Foot and Platypus.
In FY25, the company saw flat sales and a small reduction of net profit of after tax (NPAT) following challenges relating to the consumer and a 'promotional' environment.
But, for a few reasons, I think this is a good time to invest in the ASX dividend share.
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Recovery looking positive for the ASX dividend share
While FY25 was a fairly challenging year, I think the company made a number of positive comments about FY26.
Firstly, it's targeting high single-digit operating profit (EBIT) growth in FY26, including the start-up costs related to Sports Direct. EBIT growth would be a significant positive for the company, in my view, and could rekindle market confidence.
Total owned sales of continuing businesses increased 2% in the first seven weeks of FY26, with like-for-like retail sales of 0.8%.
Excluding Sports Direct, it's planning to open a further 30 stores in FY26, with the store rollout opportunity in both its core businesses and new businesses.
Nude Lucy is performing particularly well, Accent described it as "highly profitable" and is "resonating well" with its loyal and growing customer base. It now has 44 stores (including online), with seven stores added in FY25. Further stores are planned.
Agreements with Skechers and Sports Direct
I was pleased to see that it extended the Skechers distribution agreement to a 10-year term to 2035, which was pleasing considering it has more than 200 Skechers stores. There was uncertainty following the acquisition of Skechers USA Inc by 3G Capital.
The agreement with Frasers Group to rollout Sports Direct stores in Australia and New Zealand is very promising, in my opinion. Not only will the Sports Direct agreement lead to a planned 50 stores in the first six years (with up to 100 over time), but it will also allow Accent to sell Frasers' brands (like Everlast, Slazenger, Lonsdale, Karrimor and more) across Accent's retail businesses.
Plus, having Sports Direct stores will mean the ASX dividend share expands into a wider variety of sports, athleisure and sports fashion products. This will give the company a larger total addressable market.
Sports Direct Australia's digital site will be trading by November 2025 and the first physical store will be located in the Fountain Gate shopping centre which expects to open in November 2025.
Compelling dividend outlook
The broker UBS expects the ASX dividend share to pay an annual dividend per share of 7 cents in FY26, which would translate into a grossed-up dividend yield of 7.3%, including franking credits.
But, the payout could steadily increase each year to FY30.
In FY27, it's projected to pay an annual dividend per share of 9 cents, which would be a grossed-up dividend yield of 9.4%, including franking credits.
By FY30, the annual payout could be 13 cents per share. That would be a grossed-up dividend yield of 13.6%, including franking credits.
The outlook seems very positive, in my view, for the ASX dividend share. I'm planning to buy some shares within the next few weeks if it stays at the current valuation.
