Footwear retailer Accent Group grew net profit after tax by almost 10 per cent in the first half of FY20, achieved through growth at The Athlete’s Foot chain and a stabilisation of gross margin and cost of doing business.
Net profit rose 9.7 per cent to $35.3 million, while EBITDA grew by 10.5 per cent to $67.7 million.
According to Accent Group’s CEO Daniel Agostinelli, the result was driven by the group’s digitally integrated business model and its investment in digital and store formats, which led to a 33 per cent rise in digital sales during the half.
The business opened 51 new stores, including 13 in New Zealand, launched an online footwear marketplace Cremm and purchased the Stylerunner brand out of voluntary administration – Accent Group’s first non-footwear apparel brand.
Additionally, the group’s newest brand, Pivot, is expected to open its first store in April.
Accent Group also saw wholesale sales rise 6.7 per cent, thanks to strong sales of Skechers, Vans, Merrell and Timberland. Additionally, the brand expanded on its ‘vertical product’ strategy – rolling out accessories, such as socks, cleaning products, shoe laces, bags, sunglasses and hair accessories across several of its brands, which helped to drive gross margin.
Agostinelli said he was pleased with the overall result, but conceded that the group was operating in a challenging market. Moving forward, the management team will continue to focus on innovation and execution of its growth plan, while also responding to market conditions.
“Sustainable underlying margin improvement remains a key focus, including avoiding lazy, discount-driven retailing, increasing vertical brand and product mix and driving operating efficiencies,” Agostinelli said.
The first seven weeks of 2H20 saw like-for-like sales rise 3 per cent, but gross margin is expected to remain under pressure into the second half, due to the highly competitive market that has continued through into January.