Fashion and footwear conglomerate Accent Group has reported a 69.1 per cent drop in its statutory earnings before interest and tax (EBIT) to $34 million, driven down by a non-cash impairment charge, losses from closed businesses, restructuring costs and advisor costs related to the takeover bid by Frasers Group.
In its FY26 results, Accent Group decided to issue an impairment charge of $48.6 million, with the board citing the current macroeconomic environment, recent trading conditions and that the group's market capitalisation remains below its net asset value.
The goodwill impairment is a non-cash item and has no impact on the company's operating cash flows, dividend capacity, banking covenants or liquidity position.
“Notwithstanding this decision, the company continues to have a clear future growth plan and the impairment does not in any way reflect the board’s confidence in the strategic growth initiatives of the company, as laid out in the 2030 Strategic Growth Plan,” Accent Group shared in its annual report.
The footwear company – which manages the likes of The Athlete’s Foot, Nude Lucy and Hoka – also closed the remaining underperforming Glue stores and the OzSale online business. Distribution agreements for Dickies, Herschel and Superga were discontinued in FY26.
Accent noted these businesses collectively contributed losses of approximately $17.8 million in FY26.
Earnings were also hit by $4.88 million in costs relating to “restructuring” as well as advisory costs to help defend against the takeover bid by Frasers Group. It is unclear what the restructuring costs involved.
The UK-based retail group – which owns Sports Direct – tabled a $0.65 per share takeover bid in June. The offer was then extended through to the end of September, but it appears none of Accent’s shareholders has budged.
Accent continues to tell shareholders to reject the bid, and has issued a new statement today covering its results.
At the bottom line, Accent’s statutory net profit fell into the red to minus $13.8 million, falling from a positive $57.7 million in FY25.
Minus significant items and excluding tax, Accent’s underlying NPAT for FY26 hit a positive $51 million, which would have been a slight drop of 7.8 per cent on last year.
Despite the snag to Accent’s bottom line, the business reported a $14 million lift to its total sales – including The Athlete’s Foot franchises – hitting $1.635 billion. Owned sales – excluding franchises – lifted by $69 million to just over $1.5 billion.
The company also issued a dividend for FY26, at 4.5 cents per share, which is down from 7 cents per share in FY25.
"FY26 was a year of significant strategic progress for Accent Group despite a challenging macroeconomic backdrop,” CEO Daniel Agostinelli said. “We completed the closure of loss-making businesses, launched and expanded Sports Direct, continued the TAF franchise reacquisition program, and released our 2030 Strategic Growth Plan.
“Whilst the consumer environment remained challenging, the business delivered underlying EBIT of $105.3 million and is well positioned for FY27.
Across the trading numbers, Accent noted that like-for-like sales for the full year were down 0.5 per cent. This was up slightly in the first half and down in the second half, which matches similar trajectories by other fashion retail businesses through FY26.
“Q4 FY26 was materially impacted by the escalation of geopolitical tensions and a significant deterioration in consumer confidence,” Accent Group reported. “The performance sports brands, including The Athlete’s Foot, Hoka, Merrell and Saucony continued to grow and we saw year-on-year growth for Skechers, Stylerunner and UGG.
“Nude Lucy had another record year of sales and profit.”
The group’s gross margin dropped by 180 basis points to 53.1 per cent, driven by a heavy promotional environment, the loss-making businesses, and inventory management in a low-spending environment. Accent noted that excluding the closure of loss-making businesses, gross margin would have been 54.1 per cent.
In the new financial year, Accent reported that total owned sales – excluding closed businesses – grew by 3.2 per cent in the first seven weeks of FY27 compared to the same time last year.
Like-for-like retail sales for the first seven weeks were down 2 per cent on the prior year.
Accent also reported that gross margin was up, as customers responded to value fofers and promotions. Gross Margin % for July was up on prior year. The improved gross margin % in July was achieved in a backdrop of customers continuing to respond to value offers and promotions.
Accent noted that the trading environment continues to be volatile in the opening weeks of the year, noting sales into August showed improvement over July.
The sport category, including The Athlete’s Foot, appears to remain resilient, reporting positive like-for-like sales, as has Nude Lucy.
Sports Direct has also performed to plan, Accent added, leveraging the FIFA World Cup and week-on-week sales tracking has continued to improve. “The ongoing strength in the sports category provides high conviction in relation to completing The Athlete’s Foot reacquisition program and driving the Sports Direct rollout.”
Looking ahead, the footwear and fashion conglomerate has tabled $10-15 million of net cost savings already actioned for FY27, an estimated $10-20 million in gross margin upside from FX hedging already in place at an average AUD/USD rate of $0.69 cents, and an estimated $10 million benefit from The Athlete’s Foot franchise reacquisitions, store portfolio optimisation and new stores.
Group chairman Lawrence Myers acknowledged the resilience of the Accent team over the last year.
“The business has made the difficult but necessary decisions, closing loss-making businesses, tightening costs and sharpening our strategic focus, and the benefits of those decisions should increasingly flow through in FY27 and beyond,” Myers said.
“The board is confident in the Company's strategic direction and in the management team's ability to deliver on the 2030 Strategic Growth Plan."