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Accent Group (AX1)

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Accent Group (AX1)

Hi Shawn, thanks for fixing my access issues... I now have my 1st question for your Q&A. Accent have today announced that Brett Blundy has sold a 14% stake to Frasers Group from the UK, who see it as an 'exciting step' in their overseas expansion. Do you see this as a sign Blundy is exiting the share registry and if so do you think this creates any succession risk? Would you think that Accent is now in play for a full takeover and does that make it more or less investable today?

Answer

Hi Jeremy,

This can be viewed in a couple of ways as you said, interestingly the Frasers purchase comes a few days after AX1 missed the markets lofty expectations sending the stock down -15% in one  session last week:

  • Revenue: $1.45b (up 2.4% from FY 2023).
  • Net income: $59.5m (down 33% from FY 2023).
  • Profit margin: 4.1% (down from 6.2% in FY 2023) – higher expenses to blame.
  • EPS: AU$0.11 (down from AU$0.16 in FY 2023).

Sales were inline but earnings missed by ~4%. Which brings us to what now after Frasers purchase of 14.65% of AX1.

The Accent Group, operates nearly 900 stores and websites across Australia and New Zealand, a great footprint for Frasers. The company distributes global brands such as Skechers, Hoka, UGG, and Vans, alongside its own vertical brands and multi-brand sports fashion stores. Michael Murray, CEO of Frasers Group comments following the purchase were interesting:

  • “Accent has built an incredible ecosystem of sports and lifestyle brands in Australia and New Zealand. They have a strong platform across stores, digital, and distribution, offering a lot of potential for Fraser’s concepts and brands. We are looking forward to working with the Accent management team to unlock mutually beneficial opportunities for both groups.”

Retail billionaire Brett Blundy is in his 60’s and has now sold his full stake in AX1. We don’t invest for takeovers, they’re too hard to predict, but if the business performs over the coming years at a rate better than the market is giving it credit for, then Frasers could make a tilt.

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Accent Group (AX1)
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