Accent Group Limited (AX1) Plots Steps Towards Retail Expansion...

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Accent Group Limited Plots Ambitious Steps Towards Retail Expansion

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Accent Group Limited (ASX:AX1) charts ambitious retail expansion along three-year track ahead, with latest news of exclusive Reebok distribution deal secured for Australia & New Zealand.

  • Exclusive Reebok distribution deal secured for Australia & New Zealand
  • FY21 Earnings Before Interest Tax, Depreciation, and Amortisation (EBITDA) up 19.3 per cent to $242 million
  • Share price up 42.13 per cent over prior corresponding period

Pandemic retail recovery efforts in Australia and New Zealand will long be studied for examples provided by businesses like Accent Group Limited (ASX:AX1), and its ability to hedge against lockdown pressures by ramping up digital sales. The development of its digital retail ability however, is hardly the group’s only commitment as a means for overcoming pandemic woes. Focused on long-term growth, even throughout the pandemic, Accent remains set to expand its retail footprint. With lockdowns and restrictions finally easing across the nation, this places the Group in a steady position to make a significant push in expanding its physical retail presence.

In a company presentation published just today, the company reported a record year of profits, strongly driven by its digital sales performance. These results also carry Accent forward in developing its loyalty programmes and owned brands. Examples of such initiatives include the launch of virtual sales hubs in Melbourne and Sydney, as well as growing their Skechers brand loyalty programme with 345,000 new customers, with its Hype DC and Platypus brands soon to follow with their own programmes. Accent’s focus on brand development produced strong growth within its vertical sales segment, generating $25.6 more revenue, up 103.2 per cent over FY20. Further to this effort, the Group remains committed to developing its existing portfolio through consistent store expansion, with 63 stores already opened out of 120 planned new stores for FY22.

Among the Group’s latest additions to its portfolio of brands are Stylerunner, and Glue, which it holds ambitious plans to grow further. With 14 stores currently open, Stylerunner is slated to have an additional 26 stores rolled out by Christmas 2022. Accent’s development will see Stylerunner expand into New Zealand, as well as to international markets such as the US, Singapore and Hong Kong. Over the course of three years, the Group plans to develop Stylerunner into a store network of more than 60 outlets. Similarly, Accent plans to extend its Glue brand into a retail network comprising 60 stores by December 2023. For the near-term, the group has scheduled 3 such stores to open by the end of this year.

Recapping Strong Performance, with Further News of Portfolio Expansion

During his address to group shareholders, Accent Group Chief Executive Officer (CEO) Daniel Agostinelli described the Group’s success in acquiring new distribution deals over the past year. Among these new deals includes an exclusive distribution agreement with Reebok for the Australia and New Zealand markets, for an initial 10-year term. Commenting on the exclusive deal, the CEO said “The Reebok distribution agreement further strengthens Accent Group’s competitive moat, which is a broad and deep portfolio of international and vertical brands that is digital first, customer obsessed, and delivers product differentiation and strong margins.”

The group’s presentation today also recaps its strong FY21 performance. For this reporting period, the Group delivered EBITDA of $242 million, up 19.3 per cent from FY20. Its record profit sees strong contribution from its digital sales performance, which produced $209.9 million, up 48.5 per cent over the prior corresponding period. At the time of writing, the Accent share price is trading at $2.53, up 42.13 per cent compared to this time last year.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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