ACCENT GROUP LIMITED — Interim / Quarterly Report 2021

Feb 22, 2021

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Accent Group H1 FY2021 Results Presentation

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	Item Page
	Value creation and investor value proposition 3
	H1 FY21 summary results 4
	VIP, Vertical, Virtual 6
	Retail & wholesale 10
	Growth plan update 11
	Appendix 14

Accent Group H1 FY2021 Results Presentation

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10-year Total Shareholder Return[1] comparison Accent and ASX200 (30 June 2010 to 24 December 2020[2] )

• A market leading digitally integrated consumer business with 21 websites, 16 owned and distributed brands, 569 retail stores facilitating omnichannel distribution and over 7.6m contactable

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Total Shareholder Return
1,200%
since 30 June 2010:
Accent Group: 25.5%
981%
1,000% (Annualised Return)
ASX200 Index: 10.3%
(Annualised Return)
800% o
600%
o
400%
200% 181% o
0%
(200.0%)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
AX1 ASX200
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customers.

• Approaching $1 billion of sales with a market leading position in the lifestyle and performance market.

• Best in class margins through gross margin expansion initiatives and drive for cost efficiency.

Strong future growth initiatives through digital, new stores, vertical brands and new business to achieve market share growth in the $6 + billion performance and lifestyle market segment in Australia and New Zealand.

Source: Bloomberg, Accent Filings.

1. Assumes 100% dividend reinvestment on the ex-dividend date.

2. Year ended 27[th] of December 2020. Last day of ASX trading 24[th] of December 2020.

Accent Group H1 FY2021 Results Presentation

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Key Metrics[1]

$’000’s	H1 FY21	H1 FY20	% Change
EBITDA (pre AASB-16)	97,461	67,704	+44.0%
EBITDA	138,449	107,355	+29.0%
Group Sales (inc. Franchisees)	541,328	507,894	+6.6%
EBIT	81,834	55,548	+47.3%
PBT	75,219	48,400	+55.4%
NPAT	52,799	33,563	+57.3%
Digital Growth	110%	33%
Inventory	172,906	164,151
Net Debt / (Cash)	(1,656)	47,053
Interim Dividend	8.00 cents	5.25 cents	+52.4%

1. All results are presented on a statutory post AASB-16 basis unless otherwise stated

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Accent Group H1 FY2021 Results Presentation

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Digital Growth VIP & Loyalty
7.6 million
+110% on H1 FY20
Contactable customers
22.3% of total sales Additional 800k contactable customers in H1
FY20
Stores Vertical
+50 +50%
new stores opened sales growth
50 new stores opened, 5 closures $10 million in H1 FY21
The Athlete’s Foot PIVOT
68 6
corporate stores stores trading
With strong sales and margins All stores performing well
The Trybe Stylerunner
10 1
stores trading store trading
Strong double digit LFL growth in H1 FY21 3 additional stores signed
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Accent Group H1 FY2021 Results Presentation

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Digital, Virtual, VIP, Retail & Wholesale

(Stylerunner Armadale in the picture)

Accent Group H1 FY2021 Results Presentation

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Digital Sales Growth

Digital sales up 110% on H1 FY20

Contactable customer base grew by 800k to 7.6m

Delivery of online orders up to the 22[nd] of December in time for Christmas

H1 FY21 digital sales were 22.3% of sales

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FY19 FY20 FY21
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Key Metrics[1]

Record results

Fulfilled 100% more orders than H1 FY20

during key trade periods ($8.2m in sales over Black Friday weekend)

Site traffic grew by 53.4%

Endless Aisle grew by 92% vs H1 FY20

1: Percentages shown in the table represent growth on the same period last year

Digital Sales Website Sessions Orders Conversion Rate Digital as a % of Total Sales Avg. Order Value	FY20 (July ‘19 – June ’20) +65.6% +32.9% +52.0% +14.2% 17.1% +0.1%		+31.1% Pre- COVID (July ‘19 – Mar ’20) +29.1% +24.8% +0.0% 12.0% -2.3%		+142.1% Since COVID (April– June ’20) +118.8% +109.1% +39.5% 35.4% +4.6%		+109.6% Jul ’20 - Dec ’20 +53.4% +99.9% +31.6% 22.3% +8.0%

Accent Group H1 FY2021 Results Presentation

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Virtual:

• Virtual sales enabled across all Accent sites and performed strongly

• $4.3m in virtual sales YTD[1] in FY21, run rate of $100k per week from a standing start in April 2020

• Successful launch and rollout of the TAF Virtual Fit program, with sales above expectations

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Accent Group Loyalty Members

VIP:

• 7.6m currently contactable customers

• Objective is to grow our customer database to 10m customers over time

• Skechers loyalty program to be launched in H2 FY21, followed progressively by all other banners over the next 12-18 months

• YTD: 29[th] of June 2020 to 31[st] January 2021

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Accent Group H1 FY2021 Results Presentation

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• Vertical program continues to gain momentum

Vertical and Owned Brands Sales

• $9.7m of sales in H1 FY21, up 47.5% on prior year ($6.6m)

• On track to achieve over $20m in sales in FY21

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65.0%
Margin
63.2%
Margin
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• Targeting 10%+ mix of sales over time

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Accent Group H1 FY2021 Results Presentation

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Retail:

• Owned retail sales of $411.4m, up 7.7% on prior year sales of $382m

• LFL sales were up 2.7% for H1 FY21

• Strong retail sales with standout performances in Hype DC, Skechers, Platypus and Subtype

• TAF experienced outstanding growth in sales and gross margin

• New stores performing ahead of expectations

Wholesale:

• Sales ahead of expectations

• Record forward demand continuing in Skechers, Vans and Dr Martens in H1 FY22

• Includes store closures. For a breakdown by banner refer to page 15.

Store Network[1]

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609
569
524
76
77
493
447
FY20 H1 FY21 Forecast FY21
Corporate Stores Franchisees
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Accent Group H1 FY2021 Results Presentation

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Growth Plan Update

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Objectives

• ✓ One hour click and collect and same day/after hours delivery options • On track to grow to 30% of retail sales

• 1 Digital and Virtual continue to grow in usage over time ✓ Continued investment in virtual sales capability

• 2 VIP and Loyalty ✓ Contactable database now 7.6 million customers • Target contactable customers of million 10 3 Stores ✓ Continued strong store opening schedule expected into FY22 • At least 90 new stores expected to open in FY21 across all banners

• ✓ Continue to drive margin improvement • On track to exceed $20m in vertical

• 4 Vertical ✓ All multi branded banners now have vertical development programs brand sales in FY21 well established and growing

• ✓ TAF strategy on track, with 68 corporate stores • Expect the TAF franchise buyback

• The Athlete’s Foot ✓ Gross margins continue to improve drive by distributed brands and program to recommence from late vertical products FY21

• ✓ PIVOT rollout on track • 12 to 15 PIVOT stores expected to be

• PIVOT and The Trybe ✓ The Trybe store rollout to recommence following a successful H1 trading by June 2021

• and Back to School trading period

• Stylerunner ✓ Armadale store performing well ahead of expectations • 4 Stylerunner stores expected to be trading by June 2021

Accent Group H1 FY2021 Results Presentation

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o Accent Group has announced an interim dividend for FY21 of 8.00 cents per share, fully franked, payable on 18 March 2021 to shareholders registered on 11 March 2021

Dividends

o The interim dividend is up 52.4% on prior year (H1 FY20, 5.25 cents)

o Accent Group continues to be defined by strong cash conversion and the consistent strong returns it delivers on shareholders’ funds

Trading Update

o For the first 8 weeks of H2 FY21, LFL retail sales across the whole network are up 10.7% on the same period in the prior year. This trading result is inclusive of the impact of the 4 snap lockdowns and mandated store closures in Western Australia, Brisbane, Victoria and Auckland that occurred during the first 8 weeks.

o The key Back To School trading period was very strong, with TAF achieving like for like sales of 20.4% in January

o Given the continuation of COVID-19 and the likelihood of ongoing lockdowns, Accent Group confirms its commitment to continue applying JobKeeper funds to keep our team employed

Outlook

o No JobKeeper funds have or will be used in the calculation or payment of management bonuses or dividends

o Due to the uncertain trading environment relating to COVID-19, Accent Group has determined not to provide guidance for the FY21 full year

Accent Group H1 FY2021 Results Presentation

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Appendix

Accent Group Limited FY2019 Results Presentation

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Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20	Store Network1 Dec-20
Store Network1	TAF	Platypus	Skechers	Vans	**Timberland **	Dr Martens	Merrell	Hype	Subtype	Trybe	PIVOT	Other/ S’Runner	Total
Stores at End of FY20 145		125	112	24	7	6	16	71	3	8	1	6	524
H1 FY21
Stores Opened	1	13	13	2	1	5	1	5	1	2	5	1	50
Stores Closed (2) Stores at End of H1 FY21 144		138	(1) 124	26	(1) 7	11	(1) 16	76	4	10	6		(5)
												7	569
Projection FY21
Expected at the End of FY212	144	145	133	28	9	13	16	79	4	10	15	13	609

Distribution Agreements

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CAT Apparel Dec-21
Timberland Dec-21
CAT Footwear Dec-21
Saucony Dec-21
Stance Jun-22
Sperry Dec-22
Vans Dec-23
Palladium Dec-23
Dr. Martens Mar-24
Merrell Dec-24
Skechers Dec-26
FY2021 FY2027
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1. Includes websites (21) and franchises (76); 2. Net of store closures.

Accent Group H1 FY2021 Results Presentation

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Statutory Gross Margin % and FX Rate (AUD/USD Cover)

Statutory Gross Margin % and FX Rate (Forward USD Cover)

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60% 0.8
0.79
56% 0.76
0.75
0.74
0.73
52%
0.72
58.1%
57.3%
56.7%
0.70 54.5% 0.7
52.7%
48%
51.2%
0.67
44% 0.65
FY16 FY17 H1 FY18 H1 FY19 H1 FY20 H1 FY21 Indicative
forward rate
Gross Margin FX rate (Forward USD cover)
Gross Margin %
FX Rate (Forward USD Cover)
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Accent Group H1 FY2021 Results Presentation

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Financial Summary[1 –] Comparable Financial Information

Profit & Loss ($000's)	H1 FY21	H1 FY20 % Change
Owned sales Gross profit Gross margin (%) CODB CODB (%) Royalties and franchise fees Other income	466,893 271,249 58.1% (143,959) 30.8% 6,392 4,767	444,170 5.1% 252,040 56.7% +140bps (154,698) 34.8% (400bps) 5,773 4,240
EBITDA	138,449	107,355 29.0%
Depreciation, amortisation and impairment	(56,615)	(51,807)
EBIT	81,834	55,548 47.3%
Net interest (paid) / received	(6,615)	(7,148)
PBT	75,219	48,400 55.4%
Tax	(22,420)	(14,837)
Net Profit After Tax	52,799	33,563 57.3%

Operating Highlights

Sales	o Total company owned sales of $466.9m, up 5.1% on prior year o Sales impact of Victoria, Auckland and Adelaide lockdowns of $39m compared to prior year
Gross Margin	o Gross margin of 58.1%, 140 bps ahead of prior year o Vertical product strategy (shoe care, socks and accessories) on track. Total sales of $9.7m this year (last year $6.6m)
CODB	o Significant focus on cost efficiencies continues
NPAT	o NPAT of $52.8m, up 57.3%on prior year

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1. All results are presented on a statutory post AASB-16 basis unless otherwise stated

Accent Group H1 FY2021 Results Presentation

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Balance Sheet

$000's	$000's	H1 FY21		H1 FY20
Trade receivables and prepayments Inventories Trade payables & provisions		34,797		35,328
		172,906		164,151
		(152,909)		(146,969)
Net working capital		54,794		52,510
Intangible assets Property, plant and equipment
		355,965		358,833
		109,822		103,283
Capital investments		465,787		462,116
Lease receivable Right of use asset Lease liabilities
		27,273		28,656
		246,646		265,693
		(348,741)		(356,435)
Lease balances		(74,822)		(62,086)
Net cash / (debt) Deferred income Tax and derivatives
		1,656		(47,053)
		(12,581) 874		(8,689)
				14,066
Net assets / equity		435,708	410,864

Commentary

• Inventory increase driven by investment in new stores and vertical products

• Property, plant and equipment increased due to significant investment in new stores and new digital infrastructure

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Accent Group H1 FY2021 Results Presentation

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The implementation of AASB 16 Leases has significantly changed reported results however the standard does not have an economic impact on the Group, its cashflows, debt covenants or shareholder value. Below is a summary of the H1 FY21 reported results reflecting the adoption of AASB 16 and a pre AASB 16 view of H1 FY21 results as a direct comparison to the H1 FY20 results.

Profit & Loss

Profit & Loss	Profit & Loss	Profit & Loss
$000's Post AASB 16 H1 FY21 Pre AASB 16 H1 FY21			Pre AASB 16 H1 FY20 Pre AASB 16 Change
Owned sales	466,893	466,893	444,170	5.1%
Gross profit	271,249	271,249	252,040
Gross margin (%)	58.1%	58.1%	56.7%	+140bps
CODB	(143,959)	(184,947)	(194,349)
CODB %	30.8%	39.6%	43.8%	(420bps)
Royalties and franchise fees	6,392	6,392	5,773
Other income 4,767 4,767			4,240
EBITDA	138,449	97,461	67,704	44.0%
Depreciation, amortisation and impairment	(56,615)	(19,567)	(15,062)
EBIT	81,834	77,894	52,642	48.0%
Net finance costs	(6,615)	(1,362)	(1,787)
PBT	75,219	76,532	50,855	50.5%
Tax	(22,420)	(22,811)	(15,567)
Net Profit After Tax	52,799	53,721	35,288	52.2%

Accent Group H1 FY2021 Results Presentation

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Accent Group is the largest retailer and wholesaler of premium lifestyle footwear in the Australia and New Zealand region.

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Owned Multibrand Retail Banners Retail & Wholesale Distribution
Retail and Accent has the exclusive rights to distribute these brands in Australia
Wholesale
Distribution
Channels
Third-party Global Brands Exclusively Distributed Global Brands Vertical Products
Strong Brand
and Product
Relationships
Virtual and Digital VIP and Loyalty Stores
Omnichannel
Platforms and Digital sales accounted for 22.3% of total 7.6m contactable customers 569 stores enabling omnichannel
Customer sales in H1 FY21 distribution with key presence in both
Access Loyalty programs to rolled out starting H2 metropolitan and regional areas
21 websites across all brands FY21
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Accent Group H1 FY2021 Results Presentation

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o This presentation contains summary information about Accent Group Limited which is current as at the date of this presentation.

o This presentation contains certain forward-looking statements, including indications of, and guidance on, future earnings and financial position and performance. Such forward-looking statements are based on estimates and assumptions that, whilst considered reasonable by Accent Group, are subject to risks and uncertainties. Forwardlooking statements are not guarantees of future performance and are provided as a general guide only. They should not be relied upon as an indication or guarantee of future performance. Actual results and achievements could be significantly different from those expressed in or implied by this information. Neither Accent Group nor its directors give any assurance that the forecast performance in the forecasts or any forward-looking statement contained in this presentation will be achieved.

Important Notice and Disclaimer

o No representation or warranty, express or implied, is or will be made in relation to the fairness, accuracy, completeness or correctness of all or part of this presentation, or the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in, or implied by, the information or any part of it. To the full extent permitted by law, Accent Group disclaims any liability in connection with this presentation and any obligation or undertaking to release any updates or revisions to the information contained in this presentation to reflect any change in expectations or assumptions.

o This presentation is for information purposes only and is not an invitation or offer of securities for subscription, purchase or sale in any jurisdiction. This presentation does not constitute investment or financial product advice (nor tax, accounting or legal advice) or any recommendation to acquire securities. Each recipient of this presentation should make its own enquiries and investigations regarding all information in this presentation.

Accent Group H1 FY2021 Results Presentation

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