AX1/Accent group

Accent (big apparel/footwear distributor) flagged a fairly weak trading update (late last week).

It’s not one we follow especially closely, but, the weaker LFL sales are in keeping with updates from other retailers (think of HVN’s significant sales slowdown (~-15%) across the Harvey Normal Australia franchise, or The Good Guys -12%, or even Nick Scali’s c-10% decline in foot traffic) and continue to paint a picture of a struggling consumer.

Given we’d just had another rate hike, and some relatively hawkish RBA minutes (released today) the key trading period over Christmas is, in our view, unlikely to be particularly strong.

The update also pointed to rising CODB costs. That is unlikely to abate, near term, which means margins remain at risk (something that we also saw with Bapcor’s (the automotive parts company) trading update.

As such, we remain underweight the Aussie retailers.

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