Accent share price jumps despite 59% profit drop

The Accent Group Ltd (ASX: AX1) share price is climbing today following the release of the company’s full-year results for FY 2022.

At the time of writing, the footwear retailer’s shares are up 4.98% to $1.58.

Let’s take a look at what Accent reported.

Accent share price rises amid hit to bottom line

Accent delivered its FY 2022 results for the 12 months ended 26 June 2022. Here are some of the key financial highlights:

• Total sales increased 11.3% year-on-year to $1.27 billion
• Earnings before interest, tax, depreciation and amortisation (EBITDA) of $213.6 million, down 11.8%
• Net profit after tax (NPAT) of $31.5 million, down 59.1%
• Earnings per share (EPS) of 5.81 cents, down from 14.21 cents in FY21
• Final dividend of 4 cents per share, fully franked, bringing the full-year dividend to 6.5 cents per share, down 42.2%

What happened in FY 2022?

Accent reported a mixed financial performance as it dealt with a COVID-19-impacted environment for much of FY 2022.

More than half of the group’s total network of 400 stores was shut between the months of July and October due to government-mandated lockdowns.

In addition, the Omicron variant impacted customer traffic levels and confidence. The negative impact of this disruption on sales, gross margin, and cost of doing business was significant, resulting in disappointing financial results for the year.

In FY 2022, Accent opened 139 new stores and closed 15 stores where required rent outcomes could not be resolved.

Notably, total online sales grew to $263.8 million, an increase of 25.7% on the prior year. This accounted for 24.4% of the company’s total retail sales.

What did management say?

Accent’s CEO Daniel Agostinelli had this to say about the results:

The operational disruption experienced in the FY22 year, and the associated impact to the financial results, has been well reported. In the context of the operational challenges and focus that was required to manage the day-to-day business, I am very pleased with the continued progress in executing our growth plan initiatives, and in addition to our customers and suppliers…

What’s the outlook for FY 2023?

For the first seven weeks in FY 2023, Accent advised that trading conditions have been positive due to an undisrupted retail environment as well as being supported by deliveries of new product.

Total sales are up 48.9% on the back of stores open this year that were closed last year, and new store openings. Like-for-like retail sales are up 18.9%.

Despite not providing guidance for FY 2023, Agostinelli concluded:

Management recognises that there is some uncertainty in both the economic outlook and global supply chain. We also feel we have demonstrated our ability through the COVID-19-impacted period to build a higher quality business with good growth prospects that can weather the challenges and come out stronger the other side…

Accent share price snapshot

Since the beginning of 2022, the Accent share price has fallen by 35%.

In comparison, the S&P/ASX 200 Consumer Discretionary (ASX: XDJ) sector is down 15% for the current calendar year.

Accent commands a market capitalisation of approximately $815.51 million.

The post Accent share price jumps despite 59% profit drop appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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