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Footwear firm bucks discretionary blues with bumper half

Platypus Shoes 2Accent Group – formerly RCG Corp – has bucked the discretionary retail blues, recording a 19.1 per cent increase in its half-year net profit to $25.2 million.

The result comes alongside the announcement that Co-CEO Hilton Brett will retire from the company at the end of next month, following the completion of the integration of the Accent and Hype DC businesses.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA), excluding the impact of the Hype DC acquisition and performance rights, increased by 17 per cent to $49.96 million.

Company owned retail sales across the group were up 21 per cent to $295.1 million, although like-for-like sales grew by 1 per cent down 2 per cent on the prior-corresponding period, constrained by the performance of Athlete’s Foot franchisees.

Accent said that its Platypus, Skechers and Vans businesses performed well during the half, while the performance of recent acquisition Hype DC has improved “significantly”.

The Athlete’s Foot trading came in below expectations though, as franchisees struggling to keep up with trading conditions.

“We’re very pleased with the record results that the group has delivered in the first half and the progress we continue to make against our plan,” Accent co-CEO Daniel Agostinelli said.

“We’re pleased with the results of our retail business and are confident that we have the right strategies, teams, and resources in place for each of our banners to capitalise on the opportunities and meet the challenges that lie ahead.”

Accent said that LFL sales for the first seven weeks of the second-half were up 4 per cent, an improvement on the first-half.

Combined with the fact that underlying EBITDA for the first seven months of the fiscal year is up 12 per cent ahead of expectations, management expects to record profit growth for the full-year.

Gross margin increased by 0.8 per cent to 54.5 per cent, reflecting full price in December as the business delayed its clearance activity to maximise margins.

Cost of doing business increased by 16.4 per cent but was flat as a percentage of sales.

22 new retail stores were opened during the period and 7 were closed, with 10 stores planned to be opened in the second-half, focusing on the expansion of Hype DC into New Zealand.

“We continue to invest in our store network, evolving our store enviroments to ensure a leading edge customer experience,” Agostinelli said.

“The industry wide fall in centre traffic has been well publicised and while we continue to get sustainable rent outcomes for the vast majority of store renewal negotiations, it is our intent to continue to close stores where landlords are unwilling to agree to acceptable occupancy renewal outcomes.”

Investment in click-and-collect and click-and-dispatch underpinned strong online sales growth, up 170 per cent on the PCP.

Management changes

Alongside the retirement of Brett, Accent also announced on Friday morning that Hype DC co-founder and Board member, Danny Gilbert, as well as Accent co-founder Craig Thompson, will retire from the board, effective 31 March.

Accent Group chairman David Gordon thanked all three men for their role in transforming the Accent business.

“On behalf of the board, management team and shareholders, I would like to thank Hilton for the role he has played leading the team and transforming the group into a world class performance and lifestyle footwear business,” he said.

Hilton said Agostinelli is an “outstanding retailer”, and that under his guidance as sole CEO the business was positioned for growth.

“Now that the business has completed its transformation from an investment holding company into the regional leader … it is the right time for Daniel to take over as sole CEO,” he said.

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