Accent Group shares rise on 17 Glue Store closures
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The news: Accent Group shares lifted after announcing that it would close 17 underperforming Glue Store locations that did not achieve "required returns".
The numbers: It said the closures would cost bout $14 million and expected group EBIT for FY24 was between $109 million and $111 million. Before the cost of the closures, earnings were expected to be $123 million to $125 million.
The closure affects half of all Glue Store locations nationally, and will allow the company to focus on its online store and remaining 17 stores. Accent said it expected Glue to be profitable in FY25. Accent acquired Glue Store in 2021.
Accent shares were up 6.63% to $2.09 in early trading on the ASX and over the past 12 months has surged 25.15%.
The context: Accent Group CEO Daniel Agostinelli said trading conditions across the group during the second half improved with like-for-like (LFL) sales increased 4.1% compared to the prior year. For the full year, total LFL sales were up 1.7% on the previous year.
With the continued cost of living crisis Australian retail has taken a hit but clothing has seen a slight upturn in turnover in recent months.
RBC Capital Group analysts were "positive" on the store closure announcement along with the increase in LFL sales.
What they said: “I am pleased with our retail performance in H2 where the company continued to experience strong momentum in Skechers, The Athlete’s Foot, Hype DC, Stylerunner, Nude Lucy, and Hoka among others,” Accent Group CEO Daniel Agostinelli said.
“The decision to exit the 17 underperforming stores will allow the Glue Store management team to focus on a profitable business comprising 18 stores including digital.”
The source: ASX announcement
