Thank you. Good morning, everyone, and thank you for taking the time to attend the call today. Joining me on the call is our Finance Director, Matthew Durbin. We will now take you through the results for the half year ended 28th of December 2025, and a trading update for the first 8 weeks of H2 FY26. There will be an opportunity to ask questions at the end. In a promotional trading environment, growth was achieved across many of our businesses. The Athlete's Foot, Hoka, Merrell, and Nude Lucy all experienced strong growth, and pleasingly, Platypus also grew. Wholesale sales were ahead of prior year for the first half, and forward orders for the second half are also ahead of prior year. Cost of doing business and inventory, control continued to be well managed.
I can now refer you to the operational highlights on page 3 of our investor presentation, which was released to the ASX this morning. Some key highlights include: Total sales reached AUD 865 million, representing growth of 2.4% on H1 FY25. During the period, we opened 27 stores, taking the network to 898 stores, including online. Growth was delivered across both retail and wholesale channels, with vertical sales increasing to AUD 67 million, now representing approximately 8% of sales. Sports Direct opened online, we also opened our first store at Fountain Gate, with pleasing early results. We also commenced the distribution of the Lacoste brand, both in wholesale and our first store also opened in the Melbourne CBD. A new Lacoste website will launch next month, with several more stores to open in H2.
I will now hand you over to Matthew Durbin to talk about the detail of the result.
Thanks, Daniel. Turning to page four, total sales for the year were AUD 865 million. EBIT of AUD 56.5 million was in line with the EBIT guidance range of AUD 55 million-AUD 60 million, provided in the trading update on 21 November 2025. Excluding Ozsale and Glue businesses, EBIT from continuing business was AUD 72.7 million. Inventory levels were in line with plan, with age levels clean. The year-on-year increase in inventory reflects the timing of stock in transit, converting TAF franchise stores, the launch of both Sports Direct and Lacoste businesses. We also estimate that the year-on-year impact of currency in the GP was around six and a half million, or 80 basis points. Turning to page 5, summary of financial performance.
Continuing business gross margin percentage was 54.3%, impacted by the promotional environment, a disciplined approach to inventory management, and the year-on-year decline in the AUD-USD exchange rate. Cost of doing business was well managed at 44.3%. Efficiencies were gained across store lease renewal negotiations, store and support team costs, and marketing spend. Continuing to work hard to offset continued inflationary cost pressures in rent and store team wage rates. Net profit after tax for the half was AUD 28.1 million. Coming on to retail sales and store network. Owned retail sales grew by 5.2% to AUD 719 million, ahead of the overall sales growth because of the transition of those TAF franchises.
LFL retail sales are up 0.9%, with Q1 at -1.7%, and a stronger second quarter growing at 2.8%. During H1 FY26, the group opened 26 new stores and closed 21 stores, including 12 loss-making Glue and Vans stores. Total store numbers at the half were 898. Vertical owned brands and wholesale sales on page 8. Sales of vertical owned brands and products grew 1.5% to AUD 67 million, supporting improvement in underlying gross margin. Growth was primarily driven by Nude Lucy, Nils Stylerunner, and Ode. Wholesale sales increased by more than 9% to AUD 91 million. The growth was driven by Hoka, UGG, and the recent addition of Lacoste, where we commenced the wholesale of that in the second quarter of the year.
Coming on to our growth plan on slides nine and 10. The first Sports Direct store launched at Fountain Gate in Victoria. It opened in November alongside the launch of the online store. Trading to date has been pleasing, providing confidence in the growth plan. Two more stores are planned to open in half two, with a third store signed and scheduled for opening in half one, FY27. The company is in active negotiations on a further nine locations, supporting the long-term target of at least 50 stores over the next six years. Hoka continues to grow, in particular digital, with the launch of the new website in October. A new Hoka store was opened in half one, and a further three stores are planned for half two, including a flagship store in Sydney CBD.
Further stores are planned beyond FY26 for this fast-growing brand. We successfully launched Lacoste, supported by marketing activations in conjunction with the Australian Open and the opening of a flagship store in Melbourne in December. A further five stores, including online, are planned for the remainder of FY26, with additional stores in future years. The Athlete's Foot franchise reacquisition program is ahead of plan, with nine stores acquired in half one and a further eight stores planned in half two. Trading and profit from the stores is on track with plan. There's a continued ride of new stores across the brands, with at least 40 stores planned to open in FY26. In addition to the 16 store closures, there's a further seven loss banking stores forecast to close in half two, for a total of 23 stores to close in half two.
Wholesale continues to grow, supported by Hoka and Lacoste, along with a growing forward pipeline of committed orders for half two. Skechers, Vans, and UGG forward orders are ahead of prior year. Regarding cost efficiencies, disciplined cost management remains a key focus for the group, with continued cost savings targeted in occupancy, store, and support team costs and other cost areas. The company announced today the decision to close the Glue Store business, which, along with the closure of Ozsale, which wrapped up in January, improves future profitability and enables more focus and resources on the growth initiatives. Coming on to page 13, dividend trading update. The company has announced a fully franked interim dividend of AUD 0.0325 per share. The dividend represents a payout ratio of around 70% of earnings per share for the half.
The company also successfully completed a debt refinancing, increasing the total facility by AUD 102 million to AUD 372 million on improved terms, including a lower margin and tenure extended to December 2028. Turning to the trading update and outlook, total owned sales for the first eight weeks of H2 are up 7.1% to last year, supported by wholesale, new stores, and new brands. LFL retail sales for the first eight weeks of H2 FY26 were flat with the prior year. Continuing business margin % in January was also in line with the prior year. The company confirms guidance for H2 FY26 in a range of AUD 30 million-AUD 35 million, noting that this guidance assumes flat LFL sales and gross margin % flat to prior year.
We plan to run an investor strategy day later in the year, in Q4, at which point we will give an update on strategy, growth priorities, and medium-term financial framework. We'll make further details available closer to the time. I'll now hand back to Daniel to wrap up.
Thanks, Matt. We are pleased with trade in the opening weeks of H2 for FY26. Sales growth was up 7.1%, supported by another record back-to-school sale period. The recent strengthening of the Australian dollar against the US exchange rate is expected to provide gross margin support for the back end of FY26 and improvement into FY27. The company has a strong pipeline of growth opportunities, and I'm pleased with the early trade from Sports Direct, the launch of Lacoste, and the forward pipeline of wholesale orders. Recent refinancing supports the ongoing investment in our growth. Finally, I'm proud of the team, who remain focused on driving profitable sales, tightly managing costs, and executing our key growth initiatives. That concludes our presentation today, and we would be happy to take you through any questions. Thank you.
Thank you. We will now begin the Q&A session. As a reminder, if you would like to ask a question, please select the Raise Hand button at the bottom of your screen to be placed in the virtual queue. Our first question comes from Garth Francis. Garth, please go ahead and unmute yourself to ask your question.
Good morning, Daniel and Matt. Thanks for taking my questions. Good to see you back, Daniel. Could we just touch a little bit more on the contributing factors to the sales growth? You'd mentioned it was the conversion of the TAFE stores that helped lift sales. Was there anything else on that? Should we expect a similar sort of uplift for the second half and for 2027 as those stores convert?
Thanks, Garth. In terms of the other factors in that wholesale growth is playing into that and new store growth as well. You know, there's some significant size new stores that we've opened and, you know, whilst, you know, we've probably closed more stores than people were expecting, it wouldn't have been many more, and the new stores we're opening, you would expect are, you know, achieving a higher overall growth than the stores that we're closing. In terms of the second half, a similar run rate to that in terms of total growth as we continue to convert those franchise stores. I won't comment yet on FY27. We need to do the work on that year, which we're doing over the coming months.
No doubt, though, that owned retail sales should continue to grow, as those TAF franchisees convert. Yeah.
Just on the gross margin, could you just give a little bit more color around just where the promotional activity was? It looks like you've had to become more promotional in TAF recently and maybe pulled back a little bit in Platypus, which has been a change in what you've had to do. Can you just give some detail as to where you're seeing the weakness?
The lifestyle part of the business continued to be highly promotional, you know, I'm gonna say the whole of last half, and in particular from November, you know, right through till, I'm even gonna say till the end of January, to be honest. In terms of The Athlete's Foot, there was additional, I'm gonna say, market promotional activity around that November period that we had to respond to. However, in respect of January and back-to-school period, where TAF is on full price, there was no more promotional activity in TAF. Hopefully, that gives you a little bit of color. Platypus, yes, a little bit less. However, we've had to stay in the market and compete. That customer is still promotionally driven.
The nice thing is that, you know, that business has returned to growth, both in sales and in profitability.
Terrific, if I can sneak one more in. Just on the currency, previously you've mentioned a 1% currency move is around AUD 5 million to EBIT.
Yep
on a 12-month basis. Just does that hold, and how far are you hedged out, and how much do you normally pass through in terms of lower pricing, you know, given you will get a tailwind in 2027?
That's a good question. There's multiple parts to that question. Yes, I'll confirm that every 1 cent movement equals about AUD 5 million of, I'm gonna say, gross margin dollars, which if we hold it, will fall to EBIT. That's correct and still holds true. In terms of, you know, whether we're able to hold that or not, I think it, you know, largely depends on the promotional environment. I'm gonna say if other players in the market use that, you know, to, you know, impact price, we're not immune to that. However, it's not our intent to use that at this point in time to reduce price.
We intend to hold price, but that'll be a function of market conditions as we get to May and June of next year. I think that answered two parts. In terms of our hedging, we were lightly hedged. You know, I've talked about a neutral hedging policy for our business being at around 50%. We were well below that, prior to the dollar lifting to current levels, so we have been able to increase our hedging rate, I'm gonna say, above neutral levels in very recent times, as we've seen the dollar hit AUD 0.69-AUD 0.71. Hopefully that gives everyone a bit of color on that. Neutral being 50% hedged out 15 months, lowly hedged being 30% out 15 months, and currently we're hedged about 60% out 15 months.
Terrific. Thank you.
Thanks.
Our next question comes from James Lee. James, please go ahead and unmute yourself to ask your question.
Hey, guys, and thanks for taking my question. My first question is just on the second half guidance of AUD 30 million-AUD 35 million. Just to confirm, apologies if I've missed it in there, is that including Glue losses, or is that now stripped out of that second half guidance?
Yeah, no, good question, James. It's including the Glue losses, it's AUD 30-AUD 35 on a reported basis. You know, we haven't called out what we expect the Glue losses to be in the second half. We don't know. However, we will tell you in August when we report the full year results, what that was, that will be an improvement to the AUD 30-AUD 35 on a continuing business basis, if that makes sense.
Yeah. No, that makes a lot of sense.
Yeah.
The second question on Glue is, clearly we're closing the remaining stores. What we can do in terms of re-bannering them, is there much that you plan to do in that space?
There's a little bit, James, where it makes absolute sense. We're not gonna transition any of those stores unless we would, I'm gonna say, choose those locations as a greenfield site for another banner. There's literally half a handful of transitions that would make sense. The rest will close and be handed back to the landlords.
Yeah, we've actually already transitioned some, James, and they've been successful. We've been quite careful on what gets transitioned and what doesn't.
Great. Thank you.
Our next question comes from Sam Haddad. Sam, please go ahead and unmute yourself to ask your question.
Good morning. Hi, Daniel. Hi, Matt.
Hi, Sam.
ust a question on your cost of doing business. A great result there. Can you just give us color as to whether you've taken out further cost in the business, and are there opportunities for further cost efficiencies in the second half? 'Cause we know inflation's always there in the backdrop, and you're like for like sort of flat, and to cover that inflation, you need to be 2%-3% like for like positive. What's your outlook for cost of. First of all, how, any color in terms of efficiencies implemented in the first half and outlook for further efficiencies in the second half in 2027? Thank you.
Thanks, Sam. Yeah, we talked previously about, we've made, I'm gonna say, significant inroads into our support office costs in terms of support office team costs. There is more work to be done and more savings that will occur in the second half, and indeed, we expect into the first half of next year because, you know, it's been an ongoing program of discipline in that area. Particularly as, you know, I'm gonna say, Glue Store closed, all of the, I'm gonna say, the support office costs that was associated with supporting that business has to come out and is coming out. The second thing is, we're being very disciplined on our approach with marketing.
We've talked about continuing to drive efficiency in our digital marketing in terms of the amount that we're spending on performance marketing with Google and the like, and transitioning to that with the investments that we've made into our own channels and driving traffic through our known customer base. The third area, which is an emerging area, is we've now got a efficiency program on frontline team wages. To give some color to that, we are looking at, I'm gonna say, variability between like stores across our banners and using that to identify stores that might be outliers, either for underinvestment or overinvestment.
That program has literally just kicked off this month in earnest, and will drive benefits into the next 12 months. I expect there'll be a phase two into the 12 months beyond that. In an environment where comps are hard to come by and margin is, you know, being driven by promotion externally, we need to be very, very disciplined on cost, and it's one controllable thing that is right in our control, so we're going to keep doing that. I should also add, and this has been an ongoing theme, that we're being disciplined about store renewals.
You know, I'm not going to make any apology for the fact that we will continue to see stores close where we can't get to a, you know, an equitable outcome with landlords on lease renewals, and we're having some success in that. It's hard-fought, every step of the way.
Okay, that's great. Just on Skechers, that's your largest brand. Can you provide a bit more color how that's performed? 'Cause that was sort of a bit of a drag through most of the first half, I understand. Are you seeing improved trajectory in that brand?
Yeah. Yes, Sam, there has been improvement. Indeed, the business had a solid January. Some great products are coming to market. We expect that, some of the innovation that we're seeing should connect. In short, yes, we've been quite pleased for the last quarter with Skechers. That seems to be the same sort of type of results we're hearing that they're achieving, you know, in many other markets. It's all product-driven, as you're aware, and so far what we're seeing in the forward pipeline is solid.
Right. Just for my last question, just on Nude Lucy, just color on how that's going, and are you seeing trading up behavior to the Nils brand within that, within that platform?
Yeah. Sam, Nude Lucy continues to be solid. It's quite profitable. We, you know, we're being very, very careful where we're putting stores with that banner. Margins are good, and we've got a, you know, dynamite team from design to the retail team running the business, and the disciplines are, you know, amongst the best in the Accent Group. We're confident that the forward view with Nude Lucy will be as good as it is now.
the Nilos brand, that's getting good traction?
Um,
Promotional device.
Yeah. Look, Sam, we've called it out a little bit in our announcement, but we started to do the same sort of thing with a little brand called Ode, ODE. It's got the same flavor in terms of numbers that Nude Lucy had back then when we decided to push go on that. You know, we're playing with it a bit, but it's a very strong brand within the Stylerunner business. We're not wholesaling to anyone at this point. We're really starting to think about well you know, should we open a few stores and see what happens?
We've got a few pop-up stores which have been very solid actually, so that could be something for us to get into, you know in FY27.
All right. Thanks for your time.
Our next question comes from Arian Norozi. Arian, please go ahead and unmute yourself to ask your question.
Thanks. Nearly got it right. How you doing, guys? Just on the comps, please. Just the first eight weeks, you're roughly flat and you're cycling +2% from the PCP. The rest of the half, the comps optically get much easier, goes to -3%. I appreciate when you look at numbers like that, there's also all these different moving parts, what you were cycling two years before that. Is it a fair comment to say that the comps do get easier for the rest of the half or not, please?
That's a fair comment, Ari. I think that's right, you know, certainly, you know, I'm going to say many, many years in retail, there is a bit of a you know, two-year base effect, to be honest, sometimes a three-year base effect. It's almost impossible to unravel in some respects, you know, it's a matter of fact that we were negative in that period last year and it deteriorated really badly in particular in May and June. So, I'm going to sit here and say I'm quietly hopeful that against that, you know, we should be able to drive some comps but let's see.
Right. Then same thing about the wholesale sales. I mean, you printed plus 9% growth, which is a good outcome.
Yep.
In the second half of 2025, you're cycling minus 12%, you obviously had a big drop-off in wholesale orders then. Is your forward order book supportive of a pretty sharp acceleration into that half?
It's certainly very supportive of a growth on the second half last year. We'll wait and see if it's supportive of an acceleration, I'm going to say, from the 9% growth into the second half. You know, we've said that we're, you know, really pleased with the forward wholesale orders. I think, you know, we're very confident of a growth on wholesale in the second half.
Yep, Ari, the as we called out, HOKA has been, you know, very, very solid. We're quite pleased with the early read on Lacoste. Skechers continues to be solid for us. Pleasingly, as it is in our own D2C for retail, we're starting to see some Vans comps, but also the Vans forward orders on our wholesale for the first time in a long time, are actually up. We're quite pleased that hopefully we've got Vans. We've certainly found the bottom, and it should start to contribute nicely as we move forward as well. That sort of seems to be the theme around the world.
Last one, please. Just the first half 2026 result and maybe the full year guidance that you've got, or second half 2026 guidance. Setting up a business like Sports Direct is obviously costly. Like, can you just give us an idea around how much maybe trading losses and one-off setup costs that you incurred this year that we shouldn't sort of capitalize into next year and beyond? I appreciate there's obviously uncertainty as to path to profitability with the store, in terms of setting up one-off marketing support structures, like, I suspect that's pretty expensive.
Yeah. Look, in respect of, you know, I'm going to say this, the first half, where we've got, where we've got one store and digital opened, you know, you'd expect that we would have had very strong trade, even for a new brand, through November, December, and January. You know, the best way to think of it is it was neutral, you know, completely neutral to the first half position. In terms of the second half, yep, as we wrap up marketing and we're in the opening stages of a few more stores, you could imagine that it's going to be a slight drag to EBIT, however, t hat's fully factored into the AUD 30 million-AUD 35 million guidance, our forecast and expectations of that.
If I may, I'll give more color on FY 2027 when we talk at the full year. We've set our plan for FY 2027.
Right. Thanks. Thanks, guys.
Thanks, Ari.
Just a reminder to attendees, if you would like to ask a question, please utilize the Raise Hand function at the bottom of your Zoom screen. We do have a follow-up question from Garth Francis. Garth, please go ahead and unmute yourself to ask your question.
Thanks for taking the follow-up, guys. Just maybe two if I can. New Zealand sales were down 1.2%. Have you seen any change in conditions there into January, and are you concerned or do you have any optimism around New Zealand?
It's just tough, Garth. It's still tough over there. Yes, there has been some improvement, particularly in Platypus. You could argue that, you know, we had a tougher year the year prior. We're still seeing it as tough. However, we're you know, there's also some new stores that we're opening over there, particularly for Skechers in the, in terms of big box stores. Overall, it's still a very challenged market, for us anyway.
Yeah. Then one that's probably more Matt, CapEx of AUD 33 wasn't a huge step-up on the PCP. What should we expect for the second half? Is there a big step-up with the TAF conversions and the new-
Um-
Sports Direct stores?
Yeah, look, not in the second half. I think what we're starting to see is, you know, I'm going to say outside of Sports Direct, a slower opening of new stores, we've flagged before, and some transition of the CapEx that we were spending on, I'm going to say, other new banners, into Sports Direct. We've called out, you know, a couple of stores to open at this point in time in the second half. And then, you know, again, I'll be able to give more color on what that looks like in the first half. I wouldn't say a big step-up in CapEx either for the second half.
Indeed, in the back end of last year, there was quite a bit of investment in CapEx that went into The Athlete's Foot new system, where we transitioned that onto our core ERP and built TAF a brand-new website. That was not an inexpensive project. We won't be cycling that this year. I'd say sort of like-for-like CapEx into the second half, Garth, for this year.
Great. Thanks.
Thank you.
Our next question comes from Peter Storer. Peter, please go ahead and unmute yourself to ask a question.
Sorry, can you hear me?
Yep, we can. Thanks, Peter.
Good. Sorry, I'm not so familiar with some of these Zoom settings. long-term shareholder here. A question about the cash flow statement. Why have the payments for lease liabilities gone up 14.3% this year to AUD 78.2 million? That seems quite high. Also, if you take that off the operating cash flow to make it comparable with the years pre-AASB 16, the cash flow is actually quite weak this year. Can you clarify where cash flow's going forward in that, please? Thank you.
Peter, I'll have to, take part of that question on notice and go and have a look at it.
Okay
is related to two things. It will be related to the ongoing escalation in our rents.
Mm-hmm
new stores. I acknowledge 14% is a big increase. We've talked about rents going up between 4%-5%. That's cash rents going up 4%-5% a year. You're seeing that, you're also seeing portfolio growth for new stores coming through. That, when I add those two together, doesn't quite explain the 14%, I acknowledge. If I may, I'll take that offline and do a bit of further work on it as well.
Okay. Thank you.
Thanks, Peter. Appreciate the question.
I will just pause briefly to see if there are any additional questions from our attendees. We do have a follow-up from Sam Haddad. Sam, please go ahead and unmute yourself.
Yeah, thank you. Thank you. Would it be the acquisition of TAF stores also contributing to that lease increase?
Correct, Sam, spot on. That will be part of it, and that could be the balancing number. I just want to check that, before I go back to Peter and everyone else.
Just,
Certainly, as those come in, that will increase that rent. Yeah.
Just on the Sports Direct early trading, can you just give more color in terms of sell-through of your private brands and exclusive brands? You know, what trends you're seeing, just, you know, further color through Christmas.
Yeah, look, Sam, if I may, I think it's a bit early to comment on that. We've flagged a strategy day in May, and we want to see a bit more trade before we start to talk about that, if that's okay, in terms of the detail of where that trade's at. We're pleased with the trade today, but we've really only had a couple of months of read and, you know, so, if you let us have a few more months trade before we talk about that.
Yeah, sure.
Thank you.
Just more general question about the macro, you know, there's prospects of further rate rises. How do you feel the business' position generally? You know, what levers do you have? You know, there's an FX benefit, that we can look forward to, but more in terms of product offer, levers that you can pull that to sort of manage that.
Yeah, I mean, I think I'll let Daniel talk to the product pipeline in a minute and what he's seeing. I think the currency's a good lever, you know, the higher interest rates means a higher Aussie dollar, which is actually nice. I feel like I'm going to say the higher Aussie dollar is a much bigger lever than the potential impact of interest rates at the moment. That's certainly how we're feeling about it into the future. The other piece I'd say is that we're going to continue to go hard on the cost of doing business because we can't control the promotional environment, yeah, we'll just have to take that as it is and operate within it. There's certainly some excitement in the product.
Absolutely, in the product. You know, every brand is showing, as they need to, is showing, you know, great innovation. You know, we're just going to hope that we put it in front of customers and they, you know, they're excited by it as well. Some interesting things, you know, when you look at our own forward order book for wholesale, Sam, it's, it seems, it's quite solid. Brands that we don't even talk about anymore, you know, the likes of Timberland, although not huge for us, some good stuff starting to come through on some of the I guess I call it the iconic brands that we've had for a long time. I'm really pleased with what the team has done with Vans.
As you're aware, it's a big part of what we do.
Great. Thanks for your time again.
Thanks, Sam.
That brings our Q&A session to a close. I will now hand back to Daniel for closing remarks.
I thank everyone for your time today, and I look forward to either meeting you on Zoom over the next couple of days or we'll see you soon. Thank you.
Thanks, guys.