A trend away from traditional leather work shoes is helping footwear retailer Accent Group weather tough retail conditions, with a surprise profit upgrade sending its stock soaring on Friday.
Adventure goods retailer Kathmandu also delivered a better-than-expected trading update, sending its shares up almost 13 per cent on Friday.
Accent Group, which owns footwear chains The Athlete’s Foot, Hype and Platypus, and owns the rights to shoe brands including Dr Martens, Vans, Timberland and Sketchers, said earnings before interest, tax, depreciation and amortisation in the six months to December were likely to be 15 per cent to 20 per cent ahead of the previous year.
Like-for-like sales in the first 20 weeks of the year rose 2.5 per cent, but margins are 300 basis points, as Accent pushed its own brands harder and grew sales of home-brand accessories, such as Hype and Platypus socks.
The group has also wound back its use of discounting, under a strategy it has labelled “no lazy retailing”.
Chief financial officer Matthew Durbin said the business was benefiting from a broader trend away from formal work footwear, similar to the trend that has underpinned the rise and rise of the ath-leisure market.
“What’s going on in our segment is there is still this trend away from traditional ‘brown’ shoes into performance and lifestyle footwear,” he told AFR Weekend.
“We think that trend still has runway. People aren’t going back to wearing uncomfortable leisure shoes.”
Accent said it still expected mid-single digit EBITDA growth in the second half, with analysts now likely to build in expectations that Accent’s full-year 2019 underlying earnings will grow to about 12 per cent to just over $100 million.
The company’s shares leapt 12.7 per cent on Friday to $1.24, and are now up 76 per cent over the past 12 months. The stock remains some way off its high of $1.95 seen back in July 2016.
However, it didn’t all go Accent’s way on Friday, with the company coming perilously close to a first strike against its remuneration report. A “strike” is represented by 25 per cent vote against; Accent received a vote against of just under 24 per cent.
Kathmandu also provided investors with a pleasant surprise, revealing same-store sales grew at 6.3 per cent in the first 15 full weeks to November 11. Sales rose 7.1 per cent in Australia, and 5.2 per cent in New Zealand.
Chief executive Xavier Simonet said the chain had “achieved good sales growth leading into the key Christmas trading period, and we expect first-half profit to be strongly above last year”.
But he warned the first-half result is “highly dependent on the success” of the company’s annual summer sale.
Sales at the company’s hiking boots business, Oboz, which it acquired earlier this year, were $NZ15.7 million ($14.7 million) in the first quarter, at a gross margin of 39.8 per cent.
Kathmandu shares rose 12.9 per cent on Friday to $2.62, and have now risen 27 per cent over the past 12 months.
The results from Accent and Kathmandu will cheer investors in consumer stocks, who have been rocked in recent months by grim trading outlooks from The Reject Shop, Myer and Nick Scali.