Key Points
- Accent shares fall after trading update fails to impress investors
- Trading conditions impacted by Omicron variant
- EBIT forecasted to be between $30 million to $31 million for H1 FY22
The Accent Group Ltd (ASX: AX1) share price is edging lower today following the release of a trading update by the company.
At the time of writing, the shoe retailer's shares are down 2.84% to $2.05. This means that the company's shares have now lost almost 15% in value over the past month.
How is Accent performing so far for FY22?
The Accent share price is being sold off today following a mixed performance for the first-half of FY22.
For the period ending 26 December, Accent reported sub-par trading conditions, particularly in the last two months.
The company revealed that like-for-like sales across November and December fell 3.4% when compared against the prior corresponding period.
Pleasingly, digital sales continued to remain strong throughout the final months of 2021, with gross margin above management's expectations.
Following the reopening of Accent stores in New South Wales and Victoria, trade was generally in line with previous forecasts.
However, in the final week of December and one of the busiest days of the year, Boxing Day, store traffic and sales dropped. The rapid rise of the Omicron variant heavily impacted foot traffic across all banners and states, including in New Zealand.
Trade for the month of January is continuing to be affected by COVID-19, although case numbers are starting to dwindle. This could be a sign that Omicron has reached its peak, and that a recovery is near.
As a result, Accent advised first-half earnings before interest and tax (EBIT) will be between $30 million to $31 million.
Accent went further to mention that inventory levels are currently back in line, after facing delivery delays from external suppliers across December and early January.
The company is expected to release its H1 FY22 results to the market on 22 February.
Management commentary
Accent group CEO, Daniel Agostinelli touched on the company's effort, saying:
…It is clear that the ongoing pandemic continues to impact customer traffic and trade in the short term. Considering the lockdowns and other COVID-related impacts experienced in the first half of the year, I am pleased with the performance of the business.
We have a proven and high-quality management team that has risen to the challenges and effectively dealt with the complexities around store operations, staffing and supply chain due to Omicron.
As we emerge from the COVID-19 pandemic, I am confident that our integrated omnichannel business model and key growth strategies, including digital, new stores, vertical owned brands, new businesses and exclusive distribution agreements remain highly relevant and position us well for the future.
Accent share price snapshot
Over the past 12 months, the Accent share price has declined by around 15%. It's worth noting that these losses have come year to date.
Based on valuation grounds, Accent commands a market capitalisation of around $1.14 billion and has approximately 541.87 million shares outstanding.
