Why did the Accent (ASX:AX1) share price defy the odds in 2020?

Shoes retailer Accent Group Ltd (ASX: AX1) seems to have defied the odds in 2020. While other brick and mortar discretionary retailers have struggled in the face of government-imposed lockdowns this year, the company’s revenues have instead grown steadily.

In the process, the Accent share price has also risen by 27% during the year.

Let’s take a look at how the company has been able to achieve this feat.

Strong financial results

For the FY20 full year, Accent reported an earnings before interest, tax, depreciation, and amortisation (EBITDA) of $121.6 million. This was an increase of almost 12% compared to the previous year.

The company then followed this up with a strong first 5 months of FY21, saying that its sales were ahead of expectations.

More importantly, Accent reported that its digital sales were up by 129% on prior year.

This pivot to digital platform seems to have been the company’s savings grace during the pandemic lockdown when some of its retail stores had to be closed temporarily.

Investment in digital platform

In June, at the height of the lockdown, Accent’s online sales surged more than 150%, and accounted for 23% of all sales.

At the time, the company said that its strong digital sales have been well ahead of expectations, with 18 websites performing and capitalising on the the online trend.

The pivot to online has not been done overnight. The company has in fact been building its digital infrastructure over the last three years.

In the company’s annual general meeting (AGM) in November, Accent said it delivered across all digital metrics.

It said that the conversion rates on its website platforms remain strong, up 36% on prior year, and driven by improved marketing and website capability.

It also reported that the average order value growth across all its websites has accelerated.

The company said it was targeting 30% sales to come from its digital platforms overtime, with the objective to grow its online customer base to 10 million.

Accent also said it was investing heavily on its digital platforms to improve the online experience for customers. This, the company hopes, will drive incremental sales through increased conversion rates, average order value and repeat customers.

More about the Accent Group

Accent is a footwear retailer that holds the license for some hugely popular shoe brands such as Dr Martens, Saucony, Skechers, Timberland, and Vans among others. It also owns the Athlete’s Foot, Platypus and Hype DC retail outlets.

Despite the pandemic, Accent is on track to open approximately 80 new stores in FY2021. This includes new concept stores, such as Stylerunner.

About the Accent share price

As mentioned, the Accent share price has risen by almost 27%. This is despite the share price plummeting by 60% in March at the height of the pandemic. 

At the time of writing, the Accent share price is currently trading 2.61% higher for the session at $2.36. At the current share price, the company commands a market cap of $1.25 billion.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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