Australian apparel and footwear business Accent Group has managed to lift its sales and profit in the first half, but suffered a 100 basis point drop in its gross margin.
Total sales – including The Athlete’s Foot franchise sales – hit $845 million for the first half of FY25, with total owned sales at $767 million. Both were up 4.2 per cent and 4.6 per cent respectively.
The group also manages or owns over two-dozen other brands and businesses such as Hoka, Skechers, Hype DC and Nude Lucy.
Alongside the revenue boost, like-for-like sales were up 2.9 per cent. Matched with a drop in cost of doing business (CODB) as a percentage of sales, Accent Group lifted its net profit after tax (NPAT) by 11.7 per cent to $47.2 million.
However, the group’s gross margin was 55.6 per cent in the half, down from 56.6 per cent in the first half of FY24. Accent Group cited the prevailing promotional environment with the consumer responding to value and promotion throughout the half.
“Our strategy is to drive underlying gross margin improvement through an increasing mix of our distributed and owned vertical brands,” the group reported.
“CODB was well managed with CODB efficiencies in store lease renewal negotiations, support team costs and distribution costs offsetting continued inflationary cost pressures in rents and store team wages. The benefits of the cost efficiency initiatives are expected to continue into H2.”
The group added that strong sales results were achieved across The Athlete’s Foot, Hype DC, Hoka, Stylerunner and Nude Lucy. Meanwhile, wholesale sales improved on the prior year strengthened in Q1 and became more challenging in the first half.
“In the context of the challenging consumer environment in H1, the growth in sales and profit reflects the strength of the Accent business model and the ongoing drive of the entire Accent team,” Accent Group CEO Daniel Agostinelli said.
“During the half, the company delivered 2.9 per cent like-for-like retail sales growth, opened 42 new stores, secured the distribution rights for Dickies and Lacoste, divested The Trybe business and made progress on the closure of underperforming Glue stores.
“In the more promotional environment which impacted gross margin, the controllable levers of inventory and costs were well managed.”
Like-for-like sales from December 30 to February 16 are up 2.2 per cent on the prior year. Gross margin continued to be impacted by a value driven consumer and was down around 70 basis points to prior year.
“Sales growth in the first seven weeks of H2 has been positive including a record result from Back to School across the business,” Agostinelli said. “In a challenging consumer environment, the team are focused on driving profitable sales, managing controllable costs and executing the growth plan initiatives.”