Accent Group’s sales have weakened further, with the footwear retailer reporting that trading conditions have deteriorated since late August, particularly in the lead-up to and since the November interest rate rise.
Total group-owned sales, excluding the closed Glue store and The Athlete's Foot franchises, are down 1.9 per cent for the first 19 weeks of FY27. Like-for-like retail sales are down 3.9 per cent, compared with a 0.4 per cent decline in the prior year.
The slowdown has picked up pace in recent months. Like-for-like sales for weeks eight to 19, the period since the company’s previous trading update in August, are down 5 per cent.
Owned retail sales, excluding closed businesses and The Athlete's Foot franchises, are down 1.5 per cent. Wholesale sales are down 5.1 per cent.
The company put the slump down to continued elevated fuel prices, interest rate rises and general consumer confidence, which have hit spending in the footwear category. It noted that like-for-like sales have come in below expectations, and that wholesale sales below last year reflect the broader impact on the footwear market.
As at the end of October, year-to-date gross margin is up on last year, including the benefit of foreign exchange hedging. However, the company noted that gross margin has still been affected by the tougher conditions.
Accent Group reported that the key initiatives of its 2030 Strategic Growth Plan have been carried out and are delivering benefits in line with the plan. These include closing Glue and OzSale, those FX hedging benefits, cost of doing business savings and buying back The Athlete's Foot franchises. To date, though, the total financial benefit of those initiatives has been cancelled out by weaker like-for-like sales and pressure on gross margin.
The Sports Direct rollout remains in line with the company’s retail agreement with Frasers Group. Eight stores and two websites, including New Zealand, are expected to be trading by the end of December.
“The initiatives we have implemented under the 2030 Strategic Growth Plan have been delivered in line with the Plan, and the benefits they are generating aim to ensure the business remains resilient as we enter the busiest trading period of the year,” Accent Group CEO Daniel Agostinelli said.
Agostinelli said the group is well positioned for the Black Friday, Cyber Monday, Christmas and back-to-school period, which covers the three largest trading months of the year.
“The result for H1 and FY27 will depend significantly on trading during this period,” he said. “In this context, the board and management remain focused on trade and the factors within our control.”
Accent Group will hold its AGM next Friday, with all non-executive directors volunteering for re-election ahead of a possible second strike against the company's Remuneration Report. These directors exclude CEO and MD Daniel Agostinelli and Frasers Group nominee director David Forsey.
This all comes as Frasers continues its takeover bid of Accent Group shares, running since June this year, with the company eventually upping its stake to 23.94 per cent after months of little movement from Accent shareholders.
Frasers' takeover bid remains at $0.65, with Accent's share price hovering at the same price late this week.