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Footwear retailer Accent Group (ASX: AX1) refused to let COVID-19 get in the way of record profits in FY20, with sales supported by a pivot to digital.
Accent, the company behind brands including The Athlete's Foot, Skechers, Dr. Martens and Hype DC in Australia, reported record net profit after tax of $58 million, up 7.5 per cent on last year.
This performance was achieved despite the company being forced to close all of its stores in March, which at the time resulted in a 58 per cent dip in sales.
But according to Accent Group CEO Daniel Agostinelli, the company's strong digital offering built up over the last three years meant the footwear dealer was ready and rearing for this new retail reality.
"The outstanding efforts of our team who have adapted quickly to a fast-changing environment, along with the support of our loyal customers, landlords and supply partners, have delivered another strong financial result," says Agostinelli.
"Key to this result was the integrated digital capability the Company has built over the last three years, which enabled us to connect with our customers and shift our channel mix from stores to digital when all stores were closed in April.
"Driven by this strong digital growth, retail sales, gross profit and resultant operating profit in May and June were significantly ahead of the prior year."
This major push resulted in 35 per cent of total sales in the fourth quarter resulting from its online store, with digital sales up 142 per cent in that period.
The company even managed to ring up its first $2 million day of digital sales during the period, thanks to the Click Frenzy online sale.
Overall, digital sales were up 69 per cent on the prior year.
Additionally, close to half of Accent's online customers in the pandemic period were people who had not shopped with the company's brands before, either online or in stores.
Accent's defiant result also included total sales growth of 1.5 per cent to $948.9 million, and earnings up 11.8 per cent to $121.7 million.
The company's core retail business, including Platypus, Hype DC, Skechers, Vans, and Dr. Martens continued to grow, with gross margin broadly in line with FY19.
Sales of Accent's vertical product category, which includes the group's own socks and shoe care products, also grew to $13 million, more than double the $4.5 million achieved last year.
Because of store closures, Accent managed to secure rent relief agreements with more than 80 per cent of its landlords.
Undeterred by uncertainty Accent will be putting its best foot forward into FY21, with plans to open 30 to 40 new stores across its brands.
Despite having received JobKeeper Accent has declared a final dividend of 4 cents per share, to be paid on 24 September.
But CFO Matthew Durbin says wage subsidies will not be used to pay this dividend to shareholders.
"In recommending the final dividend, careful consideration was given to the contribution of wage subsidies, and the wage subsidy was not required or used in the payment of the final dividend," says Durbin.
Moving into FY21, the company says it has transformed all of its Victorian stores into "dark stores" in line with the Stage 4 lockdown in Melbourne.
In response to closures in both Victoria and New Zealand, the company has shifted sales from impacted stores to the digital channel, with total digital sales up over 130 per cent in the year to date.
Excluding the results from impacted stores, like for like sales for the first eight weeks of FY21 are up 16.6 per cent.
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