Release Date: August 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Accent Group Ltd (ASX:AX1, Financial) reported total sales of $1.61 billion for FY '24, up 2.7% from the previous year.
- The company opened 93 new stores, bringing the total number of stores to 895, including online websites.
- Customer database grew by 400,000 to 10.2 million customers, enhancing customer engagement and loyalty.
- Gross margin percentage increased by 60 basis points to 55.8%, reflecting disciplined inventory management and a higher retail mix.
- The company announced a fully franked dividend of $0.045 per share, indicating a commitment to returning value to shareholders.
Negative Points
- Reported EBIT of $110.4 million included a $17.3 million non-recurring charge related to the exit of 17 underperforming Glue stores.
- Wholesale sales declined by 17%, indicating softer demand from wholesale customers.
- Cost of doing business increased by 140 basis points year-on-year, driven by cost inflation in occupancy and store team costs.
- Inventory provision of $2.6 million impacted gross margin in H2.
- The company decided to exit the Trybe business and will not continue with the CAT distribution agreement, indicating challenges in these segments.
Q & A Highlights
Q: Can you provide more details on the decision to exit the Glue stores and the impact on financials?
A: (Matthew Durbin, Group CFO and COO) The decision to exit 17 underperforming Glue stores resulted in a $17.3 million non-recurring charge. This move allows us to focus our capital and efforts on our fastest-growing businesses, improving overall return on investment for shareholders.
Q: What drove the growth in your online sales, and how significant is this channel for Accent Group?
A: (Daniel Agostinelli, CEO) Our online sales continue to grow strongly, supported by our integrated omni-channel model. This channel is crucial, as it reinforces our best-in-class omnichannel capability and contributes significantly to our overall sales growth.
Q: How has the customer database expansion impacted your business?
A: (Matthew Durbin, Group CFO and COO) Our customer database grew by 400,000 to 10.2 million customers. This expansion, along with our loyalty programs, drives repeat spend behavior and provides valuable customer insights, enhancing our marketing and sales strategies.
Q: Can you elaborate on the performance and future plans for the Nude Lucy and Stylerunner brands?
A: (Daniel Agostinelli, CEO) Nude Lucy now has 36 stores and is trading well, with plans to open five more by December. Stylerunner continues to perform above budget, with around 10 new stores planned for FY '25. Both brands are integral to our growth strategy.
Q: What are the key factors behind the improvement in gross margin percentage?
A: (Matthew Durbin, Group CFO and COO) The gross margin percentage increased by 60 basis points to 55.8%, driven by a higher retail mix, disciplined inventory management, and an increased mix of our distributed and vertical owned brands.
Q: How is the new customer data platform expected to enhance your business operations?
A: (Matthew Durbin, Group CFO and COO) The new customer data platform, which went live in July, provides enhanced capability for more targeted customer interactions. Combined with our loyalty programs and the Qantas partnership, it will drive improved targeting and purchase behavior.
Q: What are the strategic reasons behind selling the Trybe business and not renewing the CAT distribution agreement?
A: (Daniel Agostinelli, CEO) Selling the Trybe business and not renewing the CAT distribution agreement allows us to reallocate resources to our fastest-growing businesses, ensuring better capital utilization and focus on high-return investments.
Q: Can you provide an update on the dividend and trading performance for the first seven weeks of FY '25?
A: (Matthew Durbin, Group CFO and COO) We announced a fully franked dividend of $0.045 per share. For the first seven weeks of FY '25, total sales were up 8.7% compared to last year, with like-for-like retail sales up 3.5%.
Q: What are the future growth opportunities for Accent Group?
A: (Daniel Agostinelli, CEO) We plan to open at least 50 new stores in FY '25, continue growing our online presence, and expand our distributed and vertical owned brands. Additionally, we see significant potential in the US market for Nude Lucy and further growth in Stylerunner and TAF.
Q: How has the new Platypus store concept performed, and what are the plans for its rollout?
A: (Daniel Agostinelli, CEO) The new Platypus store concept at Chadstone has shown strong double-digit growth since reopening. We plan to roll out this concept to a further 10 flagship stores in A-grade locations, enhancing our competitive position and store productivity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
