Does Accent Group Limited deliver consistent strong returns?

Team Veye | 21 Feb 2020 ASX - AX1
Does Accent Group Limited deliver consistent strong returns?

Accent Group Limited (ASX: AX1)

Accent Group Delivers Record H1 FY20 Profit

Accent Group Limited (ASX: AX1) on 19 February 2020 reported H1 FY20 Net Profit After Tax up 9.7% to $35.3 million. EBITDA grew by 10.5% to $67.7 million. This result was achieved through strong sales growth from digital and new stores, profit growth in The Athletes Foot (TAF), underlying gross margin improvement and a focus on the cost of doing business. Whilst the headline gross margin was below the prior year, this result was solid given the FX headwinds (H1 currency impact of 120bp) and more significantly the highly competitive market environment driven by the Cyber events in November. The gross margin impact to EBIT margin was largely offset by improvements in the cost of doing business.

(Chart source: TradingView)

Performance Highlights

  • Net Profit After Tax of $35.3m million, up 9.7% on the prior year
  • Group sales (company owned stores) of $444.2 million, up 14.1% on the prior year 
  • EBITDA of $67.7 million, up 10.5% on the prior year 
  • EBIT of $52.6 million, up 11.1% on the prior year 
  • Earnings Per Share of 6.54 cents, up 9.2% on the prior year
  • A fully franked interim dividend of 5.25 cents per share, up 16.7% on the prior year 
  • Strong cash on hand of $44.1 million (Data Source – Company Reports)


Veye’s Take

Accent Group has delivered strong sales and earnings growth. The strength of the Group’s digitally integrated business model, along with the ongoing focus and investment on innovation in digital and store formats, continues to drive growth. The Group continues to invest in future growth including stores, digital and new incubation businesses in footwear and the high growth athleisure segment through the Stylerunner acquisition. The growth in the interim dividend signals the confidence of the Board in the performance and financial strength of the Group. Accent Group continues to be defined by strong cash conversion, and the consistent strong returns it delivers on shareholders’ funds. “Buy” was given to “Accent Group Limited” at the price of $1.755 on 5 February 2020. It has already returned more than 21% in just 15 days. The stock seems to be in a good position to move higher. It has a minor resistance at $2.23 beyond which it can have the potential to grow significantly. Veye maintains a "Hold" on “Accent Group Limited” at the current price of $2.13 


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