Sneakers are back in fashion, as well as other types of footwear (boots, canvas, pumps etc) or so it seems from the 2017-18 results from Accent Group which boosted full-year profit more than 50% to $44 million, thanks to strong online sales growth and new stores boosting the bottom line.
Revenue for the 12 months to July 1 rose 10.5% to $703.2 million as the company brought more franchisee stores in-house and increased the total number of outlets it operates by 16 to 446 – 29 of which it revamped.
Directors declared a fully franked final dividend of 3.75 cents a share (up 25% from a year ago) bringing full year dividends to 6.75 cents per share, up 12.5% on the prior year.
Company owned retail sales grew 12.2% to $566.9 million. Directors said "This was driven by strong growth in digital sales of 131% and new store rollouts. Like- for-like (LFL) retail sales for the second half of FY18 grew by 3% and were up 2% for the full year.
"The business continued the strategy of reduced discounting, which in June negatively impacted LFL sales, but resulted in a significant margin improvement. Accent Group Gross Profit Margin for H2 FY18 was up 350bp on H2 FY17.
"Accent Group opened 31 new stores and closed 15 stores during the year, with some standout performances from new store formats. The targeted investment in store concept updates continues with new “next level” concepts launched for Hype (QVB Sydney, Queen St Mall Auckland) and Platypus (Bondi Junction), all performing ahead of expectations. During the financial year, 29 stores were refurbished,” directors said.
Accent, which also distributes Dr. Martens and Merrell brands, reported a record underlying profit of $47.1 million and said it paid down $30 million of debt (and had cash on hand of $38.8 million at July 1).
Accent Group CEO, Daniel Agostinelli, said in yesterday’s statement “We are delighted with the record profit that the Group has delivered for the FY18 year. In the face of a challenging consumer environment and increasing competition from international entrants, our strategy of delivering a best in class customer experience has delivered strong results.
“We have made good progress against our growth plan, including increased digital sales and new stores along with a significant improvement in gross profit margin through vertical brand sales and reduced discounting.”
The company said that like for like sales were up 4.6% in the first 7 weeks of the new year.
Directors said Accent "is targeting mid-single digit EBITDA growth in FY19. This is expected to be achieved through low single digit LFL store growth, continued strong digital growth, new stores, stores annualising from FY18, continued margin improvement through vertical and emerging brands and reduced discounting, which will primarily benefit margins in H1.
“We expect the The Athlete’s Foot new corporate store program will be broadly earnings neutral after implementation costs in FY19 and there will be some upfront investment and expenditure incurred opening in international markets.
"The company refinanced its debt facilities on 17 August 2018, in advance of their maturity. The new $154.8 million facility is provided by NAB and HSBC and consists of a combination of 3 and 5 year terms.
Chairman David Gordon said “The increased final dividend signals the confidence of the Board in the performance and financial strength of the company. For FY19, the Board reiterates the intention to pay fully franked dividends and a dividend payout ratio of 75% to 80% of profit after tax is targeted.”
