Accent Group Ltd (ASX: AX1) has kicked off today with a robust performance, as its share price climbs more than 7% to $2.11. Investor enthusiasm is evident for this ASX 300 retail stock following the release of its latest trading update.
According to the update, Accent anticipates its earnings before interest and tax (EBIT) for FY 2024 to be between $109 million and $111 million. This reflects a decrease of 20% to 21.5% compared to $138.8 million reported in FY 2023.
The earnings guidance includes an additional charge of about $14.2 million related to its Glue Store brand. Management has decided to close 17 underperforming stores within the Glue Store business, aiming to streamline operations and enhance profitability by FY 2025.
Excluding the Glue Store charge, Accent expects its FY 2024 EBIT to range from $123.2 million to $125.2 million, marking a year-on-year decline of 9.8% to 11.2%. Despite the decline, these figures align closely with market expectations.
Highlighting Second Half Improvements
Accent's CEO, Daniel Agostinelli, highlighted a positive trend in the second half of FY 2024. The company achieved solid like-for-like (LFL) sales growth, with H2 LFL sales outpacing the previous year by 4.1%. Overall, total LFL sales for the full year rose by 1.7% compared to FY 2023.
Agostinelli commented on the company's retail performance in H2, noting strong momentum across key brands such as Skechers, The Athlete's Foot, Hype DC, Stylerunner, Nude Lucy, and Hoka. The decision to streamline operations by closing underperforming stores will allow the Glue Store to focus on maintaining profitability with 18 remaining stores, including its digital presence.
Accent Group plans to announce its full-year results for FY 2024 on 23 August 2024, providing further insights into its operational strategies and financial performance.
This update underscores Accent's efforts to optimize its retail footprint and capitalize on growth opportunities amidst evolving market conditions.