The Accent Group Ltd (ASX: AX1) share price was well and truly out of form on Wednesday.
The footwear-focused retail company's shares ended the day almost 7% lower at $2.61.
Positively, despite this sizeable decline, the Accent share price is still up close to 80% over the last 12 months.
Image source: Getty Images
Why did the Accent share price crash lower today?
The catalyst for the weakness in the Accent share price on Wednesday was the release of a broker note out of Citi this morning.
According to the note, the broker has downgraded Accent's shares to a sell rating from neutral and cut the price target on them by a sizeable 19% to $2.50.
Citi made the move largely on valuation grounds, believing that Accent shares weren't factoring a number of potential risks that could impact the company's performance.
The broker feels that there are risks to Accent's sales from the recurring lockdowns across Australia. Particularly given how it expects there to be less stimulus in the economy this time around compared to last year.
In addition to this, its team sees risks in the supply chain. It notes that footwear manufacturers such as Adidas have had their production impacted by COVID-19 lockdowns in Vietnam.
In light of this, the broker believes that Accent will now record a decline in same store sales of over 7% during the first half of the new financial year. This is expected to lead to a reduction in both its full year earnings and dividends in FY 2022.
Though, it is worth noting that with Citi forecasting a fully franked dividend of 12.5 cents per share next year, this will still provide investors with a generous yield. Based on the current Accent share price, this equates to a fully franked dividend yield of almost 4.8%.
