Accent Earnings: Near Term Shaping Up to Be Tough, but Long-Term Growth Trajectory Intact

Narrow-moat Accent’s sales proved relatively resilient in first-half fiscal 2024 against a challenging backdrop for the consumer. Group sales of AUD 733 million fell 1.8% on the previous corresponding period, or PCP. Like-for-like sales, which exclude the impact of the additional trading week in the PCP, were down a more modest 0.6%. Gross margin surprised to the upside, rising 140 basis points as a result of discounting in the PCP and mix shift to more-lucrative private-label brands. However, the gross margin improvement was minor compared with the material step-up in costs of doing business, which increased some 500 basis points due to rising wages and rents. Pretax profit collapsed 27% to AUD 60 million.