“They were perfectly placed to take advantage of the gold rush because they were all in before it hit,” Bush, founder of the Brisbane-based retail consultancy 12High, told Inside Retail.
“It is well known that Accent Group have heavily invested in team capabilities, technology, inventory visibility and fulfilment options for many years. Covid was where they cashed in and accelerated.”
Shift to digital
Accent Group reported digital sales of $108.1 million, representing 22.3 per cent of $541.3 million in total sales in the half, which saw continued store closures due to Covid-19 in Victoria and Auckland.
Former Myer CEO Richard Umbers said Accent Group was “quick to embrace” the broader shift to online shopping in the half, particularly during key shopping events in November and December.
“The online shopping events in November proved very successful for the e-commerce sector, kicking off what for many was a very successful Christmas period,” Umbers told Inside Retail.
“Many customers had the cash saved up from lockdown, and relished the opportunity to live a little and spend, on themselves and on friends and loved ones.”
In a statement about its first-half results, Accent Group noted that customers were able to place online orders for pre-Christmas delivery up to December 22, later than many of its competitors, thanks to its strong fulfilment capabilities.
“When many retailers were only making delivery promises until early to mid-December, a cut-off delivery date of December 22 is an extraordinary promise given the stress on the fulfilment network last year,” Bush said.
An 800,000-person increase in ‘contactable customers’ also helped drive digital growth in the half. Accent Group now claims to have 7.6 million contactable customers in its database.
“Having visibility on customer browsing and buying patterns, accessing a lower cost of acquisition and automating personalisation are all multiplier effects on the bottom line,” Bush said.
“It takes more investment initially but sets up a sustainable business model. And as we’ve seen from this week’s Facebook flex, it has never been more important to have direct access to your customers.”
New stores and vertical products
Accent Group opened 50 new stores and closed five in the half, bringing its total store count to 565. It’s on track to open at least 90 new stores in FY21, which is more than originally forecast, thanks to the quality of the deals it is getting in shopping centres, according to CEO Daniel Agostinelli.
“We have a model that attracts youth,” Agostinelli said on an investor call on Wednesday.
“Our sector is very strong and has been strong for some time. Covid has actually made it stronger. Our shopping centre partners love the fact that we execute. We feel we put good-looking stores on the ground and provide a great environment for that type of customer and they’re responding.”
Agostinelli added that the deals in “outer regions”, such as Shepparton and Traralgon in Victoria and Green Hills in New South Wales, are particularly strong and gaining momentum.
Overall like-for-like sales were up 2.7 per cent in the half, with standout performances in Hype DC, Skechers, Platypus and Subtype. The Athlete’s Foot also had strong growth, off the back of a successful back-to-school period, while Stylerunner, which opened its first store in the half, outperformed expectations.
The company also reported record forward order demand for Skechers, Dr Martens and Vans.
Sales of vertical products were up 50 per cent year on year in the half to $10 million, with all multi-brand businesses now having vertical development programs. Stylerunner on Tuesday launched a new vertical brand, Stylerunner the Label, which it expects to start selling internationally in the next six months.
The company credited its strong gross margin of 58.1 per cent in the half, up 140 basis points, in part to this strategy.
What’s next for Accent Group
With $72.8 million cash on hand at the end of the first half, Bush said Accent Group is now in the “perfect position” for acquisitions and investments.
“Where it gets interesting for businesses like Accent Group, is the opportunity that this readiness now presents them,” he said.
“To put it in perspective, Myer has $8 million cash on hand.”
Accent Group is among a select group of retailers, including Super Retail Group, Kogan and Temple & Webster, with significant war chests, Bush said.
“I expect some big moves and a further widening of the divide between good and average retail in 2021.”