It has been another rough session for Accent Group Ltd (ASX: AX1), with heavy selling following a fresh update to the market.
At the time of writing, the retailer's shares are down 14.11% to 53.3 cents.
That drop has pushed the stock back to levels not seen since June 2013, wiping out years of gains.
Shares are now down around 25% over the past month and roughly 71% over the past year.
The move comes after the company released a trading update alongside news of an ASIC investigation.
Let's take a closer look at the announcement.
Image source: Getty Images
Profit outlook cut after tough April
In its release, Accent said trading was broadly in line with expectations through to the end of March, but conditions became more difficult as April progressed.
The company pointed to weaker consumer confidence, higher fuel prices, and geopolitical tensions as key factors hitting both sales and margins.
For the first 18 weeks of the second half, total sales rose 7.1%, though like-for-like retail sales slipped 1%, while gross margin also eased to 54.2%, down 80 basis points on last year.
Those pressures are now starting to show up in the earnings outlook.
Accent now expects the second-half EBIT to land between $23 million and $28 million, including $2 million in restructuring costs tied to a planned cost-out program.
Full-year EBIT is now expected to come in between $79.5 million and $84.5 million.
Back in February, the company was guiding to $30 million to $35 million for the second half, so this has been a clear step down.
ASIC investigation adds uncertainty
Alongside the trading update, Accent confirmed it has received notices from ASIC requesting information as part of an investigation.
The probe relates to suspected contraventions of the Corporations Act tied to trading in the company's securities between 23 May and 10 June 2025.
The investigation involves CEO Daniel Agostinelli, Non-executive director Michael Hapgood, and another senior employee.
No charges have been laid, and the company said there are no allegations against the business itself.
Accent also noted that Agostinelli's share sales were pre-approved and that he retains the full support of the board. Hapgood has advised that he did not trade during the relevant period.
The company said it is cooperating with ASIC.
Foolish bottom line
There are a few moving parts here, but the downgrade looks to be doing most of the damage.
The retail environment is already a tough space, and the latest update shows how quickly conditions can turn against the business.
Sales growth is still positive on the surface, but margins and like-for-like performance are going the other way.
The ASIC investigation adds another issue for investors to weigh up, even if no wrongdoing has been alleged.
Personally, I would stay away until things start to stabilise and margins improve.
