Accent Group to capitalise on ‘seismic’ shift in consumer behaviour
Lifestyle footwear retailer Accent Group said its digital sales have continued to strengthen and its trading performance over the last two months has gone beyond expectations.
“It is clear that there has been a seismic and most likely enduring shift in consumer behaviour,” said Daniel Agostinelli, Accent Group CEO. “With 18 websites and our leading digital capability, Accent Group is capitalising on this trend.”
Agostinelli added that during the recent period, the company attracted many new customers online who had never shopped with them before, and said digital growth will continue to be the company’s number one priority.
Accent Group’s digital sales for the month of May were $29 million. In June, digital sales represented 23 per cent of total sales.
During the two-day Click Frenzy event in May, Accent Group posted a daily record of over $2 million, which, according to the retailer was achieved at the same time as all its stores were trading and open for business.
“The digital infrastructure that Accent Group has built over the last three years has ensured that record customer numbers and deliveries could be managed from our digital platform with significant additional capacity and scalability still available,” Agostinelli said.
The company said FY20 earnings before interest, taxes, depreciation and amortisation (EBITDA) is now expected to be around 10 per cent above the $108.9 million achieved in FY2019.
Accent Group stated this result has been achieved through strong performance in May and June driven by digital sales, effective cost management, the availability of the Australian and New Zealand government wage schemes and the support of its supplier and landlord partners.
Sales in May and June (to week 51) have been strong with like for like sales up 7 per cent. From June 1, the group stood up all its 1,500 permanent employees to full employment and full pay, which enabled a further acceleration of sales results in June.
The company said the work completed to rightsize the group’s inventory and stronger than planned sales ensured that closing inventory will be clean, adding that FY20 final operating profit below the EBITDA line is expected to include a non-cash impairment of assets of $3-4 million on several store and other assets where revenue has been impacted in the current environment.
Accent Group closed all its stores on March 27 but stated they are now all open. On April 27, the company announced the group’s plan to progressively reopen its more than 500 store network to customers through the month of May.
All Australian stores had reopened for trade by May 11 and New Zealand stores reopened on May 22.
In general, sales in New Zealand, Western Australia, South Australia, Queensland and regional areas have bounced back more strongly than the metro centres in Melbourne and Sydney.
The customer trend to activewear and performance running continues to remain very strong in Stylerunner and The Athlete’s Foot businesses, with a broad-based recovery in spend across all banners and product categories through May and June.
Accent Group said to date, it has concluded successful negotiations with its landlord partners and subsequently has continued to pay rent, in respect of the vast majority of its stores, with landlords who have been willing to come to the table in the spirit of the Government Code of Conduct.
“These outcomes have been achieved with both major and independent landlords who have acted in the spirit of the code and shared and financial impact of the continuing lower levels of centre customer traffic,” Agostinelli said.
“We will continue to seek to negotiate with our other landlords in the hope that they too will engage in the spirit of the government’s announcements. Where we are unable to achieve a solution that we consider to be fair, we will close stores.”
He added that he is delighted to report that to date, they have been able to reach agreements with the vast majority of their major independent landlords.
“We recognise the contribution of our team, customers and supplier and landlord partners in supporting the company to achieve this result through a very challenging period,” Agostinelli said.
The ASX-listed shoe retailer also announced it will open three new stores in New Zealand next month, adding that they plan to add at least another 70 stores across the country over the next 10 years, according to a report on the NZ Herald.
The company currently has 46 stores in New Zealand.