The Accent Group Ltd (ASX: AX1) share price has raced to a 52-week high on Friday.
In morning trade, the youth fashion and footwear retailer's shares are up 10% to $2.36.
This follows the release of a strong half-year result from Accent.
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Accent share price jumps on strong earnings growth
- Total sales up 39% to $825 million
- Earnings before interest, tax, depreciation and amortisation (EBITDA) up 70.9% to $170.2 million
- Net profit after tax up 290% to $58.3 million
- Fully franked interim dividend up 380% to 12 cents per share
- Net debt down 30% to $63.6 million
What happened during the half?
For the six months ended 31 December, Accent reported a 39% increase in sales to $825 million.
This reflects strong in-store sales, softer online sales, the opening of 53 new stores, significant store closures in the prior corresponding period, and one extra trading week.
On the bottom line, Accent posted a 290% increase in net profit after tax to $58.3 million. Management advised that this was driven by stronger gross margins, lower costs, and improved earnings from its online business. Although the latter posted a decline in sales, its earnings were stronger year over year.
This ultimately allowed the Accent board to increase its interim dividend by 380% to a fully franked 12 cents per share.
Management commentary
Accent's CEO, Daniel Agostinelli, was very pleased with the half. He said:
I am delighted with the results achieved in H1 FY23. The continued focus on customers, new product, full margin sales and return on investment has delivered a terrific H1 result. What is most pleasing is the strength and consistency of performance across our large core banners, including Skechers, Platypus, Hype DC, The Athlete's Foot (TAF), Vans and Dr Martens, along with the progress that we have made in our new banners now that trading conditions have normalised.
One of the key initiatives for H1 was driving the profitability of the Accent Group digital business. Overall online sales have grown 160% to $134 million compared to FY20. Whilst sales were down on last year due to the lockdowns in 2021, we have improved our digital business and online EBIT was ahead of last year.
Outlook
While no guidance has been provided for the second half, management notes that trading has been strong. Like for like sales were up 16% for the first seven weeks of the half.
Pleasingly, management appears optimistic that this positive form can continue thanks to its focus on younger consumers. Mr Agostinelli concludes:
Whilst we recognise that there is some uncertainty in the economic outlook, to this point we have not yet seen any significant change to consumer spending in our categories. Many of our brands target a younger customer demographic who tend to be less impacted by interest rates and cost of living pressures.
In conclusion, I am pleased with the ongoing progress that has been made on our key growth strategies as we continue to build a strong, defensible business in Australia and New Zealand. Our portfolio of global distributed brands, owned vertical brands, integrated digital capability and large store network are core assets of the Group and position the Company well for growth into the future.
