Accent Group Ltd (ASX: AX1) shares tumbled more than 15% last Friday following the company's trading update.
Accent Group is a footwear and clothing retailer, wholesaler, and distributor.
It owns and operates over 800 retail stores across Australia and New Zealand, and has exclusive distribution rights for an extensive portfolio of original and international brands.
The company has now seen its share price fall more than 50% year to date, including last week's selloff.
Accent Group shares closed last week trading at $1.02 each.
The Motley Fool's James Mickleboro reported last Friday that the company expects its first-half earnings before interest and tax (EBIT) to be in the range of $55 million to $60 million.
This is down sharply from $80.7 million in the first half of FY 2025.
Looking ahead, management is guiding to full-year EBIT in the range of $85 million to $95 million. This will be down from $110.2 million in FY 2025.
Following the fall, Morgans provided fresh analysis on the footwear retailer, which included a hold recommendation and a reduced target price.
Here's what the broker had to say.
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Weak sales trading update
Morgans said in Friday's note that the company provided a weak sales trading update for the first 20 weeks of FY26. The company pointed to persistent and challenging retail trading conditions, as well as continued heavy promotional activity, which is impacting margins.
As a result, Accent Group significantly downgraded its FY26 guidance, now expecting EBIT of between $85m and $95m, representing a 14% to 23% year-over-year decline (compared to the previous guidance of high single-digit growth).
We have lowered our earnings forecasts in line with the bottom end of updated guidance range. We have lowered our EBIT by 27% and 24% in FY26/27 respectively.
Accent Group share price target reduced
Based on this guidance, Morgans has moved its recommendation to a hold, citing ongoing challenging trading conditions and earnings volatility.
The broker now has a $1.10 price target (previously $1.65) on Accent Group shares.
From Friday's closing price of $1.02, this indicates a modest upside of 7.8%.
