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.
Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.
This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.
Please note that past performance is not a reliable indicator of future performance.
General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.
Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.