Footwear giant Accent Group has released its FY20 results, reporting that total sales increased 1.5% to $948.9 million for the year.
The business reported EBITDA of $121.7 million, up 11.8% compared to FY19, while its EBIT was $87.2 million, an increase of 8.2% compared to last year.
Accent reported net profit after tax (NPAT) of $58 million, a 7.5% increase compared to the prior period, while its gross margin was 55.8% compared to 56.1% in FY19.
The business closed out the year with its inventory clean, with total inventory sitting at 1.8% lower than last year.
It also closed the period with cash on hand of $54.9 million and net debt of $31.2 million compared to $49.4 million last year.
As has been the trend for this year, Accent saw its digital sales lift during the period, with the business reporting a 69% increase on last year.
Turning its store network 'dark' throughout the shutdown period allowed the business to keep digital sales flowing, with eCommerce sales accounting for 17% of retail sales throughout the year.
However, Q4 was a standout period for the Group's digital sales, with the business reporting a 142% increase to $65 million in Q4, with digital sales representing 35% of total retail sales in the period.
During Q4, more than 50% of Accent's digital customers were new customers that had not shopped with the business before.
Throughout the year, the business grew its contactable database by 2 million to a total of 6.8 million customers.
Accent Group CEO Daniel Agostinelli said that despite the difficulties of 2020, the business still delivered strong results.
"Given the challenging environment, we are pleased to report that Accent Group has delivered another record year.
"The outstanding efforts of our team who have adapted quickly to a fast-changing environment, along with the support of our loyal customers, landlords and supplier partners, have delivered another strong financial result.
"Key to this result was the integrated digital capability the Company has built over the last three years, which enabled us to connect with our customers and shift our channel mix from stores to digital when all stores were closed in April.
"Driven by this strong digital growth, retail sales, gross profit and resultant operating profit in May and June were significantly ahead of the prior year.
"I would like to thank all of our team for their efforts throughout the year," he said.
Throughout the period, the business also consolidated management of The Athlete’s Foot (TAF), Stylerunner and Saucony under a dedicated group executive to capitalise on the demand for active and performance wear.
The business also opened 57 new stores throughout the year and closed 12 where rental agreements could not be reached.
For the first eight weeks of FY21, Accent reports that like for like retail sales in Australia and New Zealand are up 1.3%.
COVID-19's Impact
However, it wasn't all positive experiences for the business in FY20, with Group sales in March and April down $55.7 million (58.2%) compared to FY19.
In response to this decline, management bought to the Board a plan to reduce their remuneration by 80%.
Similarly to many, Accent accessed the government's wage subsidies that it was eligible for to keep its full team retained while stores were closed.
The business said that due to the significant loss of foot traffic, many stores would have remained closed during the reopening period if it weren't for the government's support.
From the beginning of June, all permanent store employees returned to full hours and full pay.
However, as the second lockdown commenced in Victoria, Accent saw its Victorian store sales decline significantly from the beginning of the year.
Similarly, as New Zealand experienced new cases, the business had to close its stores there too.
In response to the renewed impact of COVID-19 in Victoria and then New Zealand, the Company shifted sales from impacted stores to the digital channel, with total digital sales up over 130% year to date.
This has allowed the business to keep all staff on full pay and hours, despite the stores being closed to the public.
Accent chairman David Gordon thanked the business' team for their hard work over the year.
"The Accent Group Board recognises the dedication, resilience and performance of the entire Accent team over the year.
"The demonstrated leadership capability to adapt quickly to the challenging new environment has been key to the results achieved during a confronting final quarter.
"Our business objectives have been achieved with the safety of our team and our customers front of mind, with a strong focus on safety protocols since reopening in May," he said.
Outlook
Accent Group reports that it remains committed to its growth plans and has outlined key objectives for FY21.
The business was to drive its digital sales to account for 30% of sales by continuing to leverage its digital capabilities.
It will also make continued investment into virtual sales channels, CRM tools, express delivery capability and loyalty programs.
Accent Group is also set to open between 30-40 new stores across Skechers, Platypus, Hype DC, Dr Martens, Vans, Merrel, CAT and The Trybe brands.
The business will also continue to drive margin expansion through a higher mix of distributed brands and growth in vertical brands and products.
Alongside Shubar previously launched in Hype DC, Accent is set to launch a new vertical brand ITNO (In The Name Of) in Platypus in H1 FY21. Sales in vertical brands and products grew to $13 million in FY20.
The Athletes Foot
Accent is set to introduce a new endless aisle initiative to The Athletes Foot to accelerate digital sales.
The business is also set to introduce apparel to the brand and will continue to grow new, existing, exclusive and vertical brands such as Saucony, On Running, MBT and Alpha in The Athlete's Foot digital and store network.
Accent will also continue to acquire franchise-owned stores over time.
Pivot
Accent's new sporting goods, footwear and apparel store Pivot is set to open 12 new stores in FY21 and the business will continue to grow its digital sales.
Stylerunner
Acquired in November 2019, Accent will open the business' first store in Armadale (Vic) in November, with up to six additional stores set to open in FY21.
Similarly to Pivot, Accent will continue to grow the digital sales of this brand.