Accent Group Limited AGM Trading Update: Highlights and Strategic Moves

Accent Group Limited (ASX: AX1) has provided its latest trading update at the Annual General Meeting, reflecting steady progress in sales, margin pressures, and key strategic initiatives. Let’s break it down.

Trading Update

  • Sales Growth:
    • Total Sales (Including Wholesale): Up 6.8% for the first 20 weeks of FY25.
    • Like-for-Like (LFL) Retail Sales: Increased by 3.5%, consistent with early FY25 trends.
  • Gross Margin Impact:
    • Margins are down by 70 basis points (-0.7%) compared to last year, reflecting a promotional trading environment as consumers respond to discounts and value offers.
  • Cost Management:
    • Continued focus on reducing the cost of doing business (CODB) is yielding results, with CODB-to-sales showing improvement even after accounting for restructuring costs in the support team.

CEO Insights

Group CEO Daniel Agostinelli highlighted:

  1. Consistency in Retail Sales: LFL growth remains stable compared to early FY25.
  2. Customer Behavior: Shoppers are increasingly drawn to promotional offers, which has weighed on gross margins.
  3. Preparedness for Peak Trading: The Group’s inventory and operational strategies are aligned for the key holiday trading months.

Strategic Updates

  • New Store Rollout: On track to open 40 new stores in H1 FY25.
  • Divestment of The Trybe:
    • Completed in August and fully transitioned to new ownership.
  • Closure of Underperforming Glue Stores:
    • 17 stores set for closure; 8 stores have already been shuttered as planned.

Frasers Group Engagement

  • Board Appointment:
    • Dave Forsey, former CEO of Sports Direct and current Frasers GM for the APAC region, will join the Accent Board after the AGM.
  • Future Collaboration:
    • Discussions with Frasers Group regarding strategic opportunities remain ongoing.

What This Means for Investors

  • Sales Growth Amid Challenges: While sales growth is solid, margin pressures highlight the need for operational efficiencies and strategic pricing.
  • Strategic Progress: The store rollout and restructuring efforts signal a sharper focus on profitable growth.
  • Frasers Group Partnership: The collaboration could unlock new synergies, given Frasers’ strong retail expertise and global footprint.