Good morning, and thank you everyone for joining the Accent Group FY 2023 full year results investor briefing. We will begin with a presentation by Daniel Agostinelli, Group CEO, and Matthew Durbin, Group CFO and COO, followed by a Q&A session. If you would like to ask a question, please select the Raise Hand button to be placed in the virtual queue. The Raise Hand button can be found at the bottom of your Zoom interface. Now, Daniel, over to you. Thank you.
Good morning, everyone, and thank you for taking the time to attend the call today. As mentioned, I am joined today by our Group CFO, Matthew Durbin. We will now take you through the results for the full year ended 2 July 2023, and a trading update for the first seven weeks of FY 2024. There will be an opportunity to ask questions at the end. In opening, I am delighted with the full year results. In what is the first undisrupted year since 2019, FY 2019. The Accent teams continued to focus on our customers. Fresh new product and return on investment has delivered a terrific result. Group EBIT for the year of AUD 138.8 million, is up 123 on the prior year, and a new record for our group.
If I can now refer you to the operational highlights on page four of our investor presentation, which was released to the ASX yesterday evening. Our key highlights include: the opening of 18 new stores, which now total 821 stores. Our contactable customer database grew by 500,000 customers to 9.8 million customers. For the year, online sales represented 19% of sales. Digital sales in H2 grew by 19.8% on H2 FY 2022, and our overall digital profitability was significantly ahead of all prior years. Vertical Own Brand and products sales grew to more than AUD 100 million and over 7% of our total sales. We now have 22 Nude Lucy stores that are trading, and trading well. Significant continued growth in Platypus and Skechers stores, with 36 new stores opened. I will now hand you over to Matthew Durbin.
Thanks, Daniel. Turning to slide five, page five. Total sales for the year, including TAF franchisees, are now approaching AUD 1.6 billion and are up 24% to the prior year. Gross margin percentage improvement of 100 basis points to 55.2%. Cost of doing business of 44.5% was an improvement of 280 basis points. EBIT of AUD 138.8 million was up 123%, and we had a net profit after tax of AUD 88.7 million, significantly up on the AUD 31.5 million achieved last year. The return on equity grew to 20.1%, compared to 7.1% last year.
Inventory levels at year-end were clean of aged inventory and closed below the prior year. Coming on to digital on page seven. Digital sales have increased by more than three times in the last four years since the uninterrupted FY 2019 base. It was expected that online sales would pull back in FY 2023 off the back of the store disruption experienced in FY 2022. Having said this, in half two, digital sales grew by 19.8%. In FY 2023, the mix of online sales at 19.1% has nearly doubled from 10.2% in FY 2019. The focus for online in the last twelve months has been achieving profitable sales through improved gross margin and lower costs in digital marketing and distribution.
We continue to invest in new and upgraded websites and underlying digital infrastructure, with 11 websites opened or upgraded during the year. We wanted to note that as an integrated omni-channel retailer, it's our intent moving forward to remove significant separate disclosure on digital performance, as we feel that this is now intricately linked with overall retail sales. Moving on to loyalty on page eight. Contactable customer numbers grew by 500,000 customers to 9.8 million customers. This continues to be the result of a strong drive to invite customers to provide emails in store, along with the impact of our loyalty programs now in place in The Athlete's Foot, Skechers, Hype, Platypus, and Merrell. The company now has more than 8 million members signed to our loyalty programs, driving repeat spend behavior and improved customer lifetime value.
We continue to invest in the rollout of our new loyalty programs and our customer data platforms. Coming on to retail wholesale on page eight. During the year, 80 new stores opened, 15 stores transitioned, and 21 stores closed from discontinued banners and where sustainable renewal terms could not be agreed. New stores continued to perform strongly, with 36 new stores opening in Platypus and Skechers, and Nude Lucy now has 22 stores and is trading well. At least 50 stores are planned to open in FY 2024. Wholesale sales continued to grow in FY 2023, driven by our existing and new distributed brands. Sales of Vertical Own Brands and products grew by 40% to more than AUD 100 million and continue to support the improvement in underlying gross margin. Turning on to the growth plan update on page nine.
The company continues to have a valuable portfolio of growth opportunities across its core banners and new businesses, including the continued rollout of new stores, significant further rollout opportunity in both core banners and new businesses over the next five years. At least 50 new stores are planned to open in FY 2024. Improved underlying gross margin from continued growth in the company's moat brands, being its distributed and vertically owned brands. Along with margin improvements, these brands continue to provide an unreplicable competitive advantage through product access, forward visibility to global product trends, and end-to-end customer access in Australia and New Zealand, along with exclusive products. We continue to expect growth in Nude Lucy from the continued rollout of new stores and online growth. We continue to expect operational improvement in Glue Store and Stylerunner.
Profit growth will continue in TAF from profit margin expansion and franchise stores continuing to be acquired. We currently have a network of 92 corporate stores and 63 franchise stores. Continued growth in digital sales and customer loyalty programs, driving improvement in customer frequency and frequency. Loyalty programs are now launched in Platypus, Hype DC, and Skechers, with more to come over the coming six to 12 months. Coming on to dividends and trading update. Our business announced a fully franked final dividend of AUD 0.055 per share, bringing total dividends for the year to AUD 0.175 per share. On the trading update, the company's focus since the end of June has been driving full price, full margin sales, leveraging the clean inventory levels as we exited FY 2023. This has impacted comp sales.
Having said that, gross margin over this period has been similar to the strong gross margin achieved in the first seven weeks of the prior year. For the first seven weeks of FY 2024, total sales are up 2.8%, and total retail sales are up 5%. Like-for-Like Sales, retail sales were down 1.8% on the prior year, noting we're cycling strong Comp Sales of +19% for the first seven weeks of last year. We've seen an improvement in trade from July into August. In August, month to date, after three weeks, LFL retail sales are up 1%. Digital sales for the first seven weeks are up more than 20%. I'll now hand back to Daniel to wrap up.
Thank you, Matt. We recognize there is ongoing uncertainty in the economic outlook, and like others, we have experienced softening sales across May and June and into the first seven weeks of this year, with apparel being softer than footwear. We continue to be pleased with the trading strength in a number of our banners, where lower prior year comps and product innovation has resulted in positive like-for-like retail growth. We're also pleased with the group gross margin achieved to date, which will continue to be strong with an ongoing focus. In conclusion, I'm very pleased with the progress that has been made on our key growth strategies, and as we continue to invest in our business in Australia and New Zealand. In these more challenging times, we have over the last three years... Excuse me.
In these more challenging times, as we've had over the last three years, we will continue to open new stores, to invest in new websites and current websites and digital capabilities, and drive innovation in all our products and customer offers. This concludes our presentation today, and we'll be happy to take any questions. Thank you.
Thank you. We'll now begin the Q&A session. As a reminder to the audience, if you'd like to ask a question, please select the Raise Hand button at the bottom of your Zoom screen. For those who have dialed in, please select star nine to raise your hand and star six to mute or unmute. Our first question comes from Sam. Sam, if you'd like to ask a question?
Hello, can you hear me?
Yes.
Yep.
Hi. Excellent.
Hi, Sam.
Hey, Daniel. Hey, Matt. Thanks for the presentation this morning. You're cycling around 19% comps for the first seven weeks of last year. But can you tell us how these comps will evolve over the first half? I think the disclosures in the PCP are more focused on total sales growth than comps. So just keen to understand what you're up against as we, you know, progress over this half and into next half.
Yeah. So look, I think it's fair to say that the comps right through the first half last year were very strong. They started strong, and they continued strong, and I think it's been well reported that the market did well into November and December last year. So I would say we're cycling strong comps right through to till the end of December and into January, Sam, is the truth. We're very pleased that, you know, as we've got to August, we're starting to see, you know, some comp performance even above that. You know, what we felt was a pretty strong year. Yep.
Yeah. And the improvement in August, I mean, do you put it down to, you know, any improvement in foot traffic, weather, better products? Is the consumer getting a bit better? Like, what do you attribute the better August to?
Sam, I think definitely better product. The teams have got a fantastic forward pipeline of new products coming through. You may be aware that we also have the HOKA brand, the distribution for HOKA. It's been very pleasing to see what's happening within that banner, and we see ongoing strength coming from essentially all new products and the setup we've got right into December.
Got it. And what are you doing with prices in FY 2024, given the headwinds from an FX perspective that you're up against? Is the consumer strong enough at the moment to absorb price rises?
As we've previously talked about, Sam, we planned for, you know, currency through this period to be mid-60s And we put through another round of price rises through June and early July. So far, we haven't seen any particular resistance to those price rises. And you know, our hope at the moment, hope's not a strategy, but our hope is that with the dollar around mid-60s, it could be a bit lower than that or a bit higher, we're well placed. But if we can take a little bit more price, we feel that that's what we can do as we start to get towards November, December. I think that'll be a bit dependent on the conditions, though.
But we certainly put another round through in the last, you know, eight weeks, and, we haven't seen any major resistance to that. Have you got anything to add to that, Dan?
No. The product segmentation that our banners are getting from third-party suppliers and indeed from our internal distributed brands, it's been received well by our customers. And I certainly don't have managers or senior teams in the retail banners saying that our prices are, you know, too high.
Got it. And that last round of price increases, is it more than low single digit as a percentage?
It would be high single digit as a percentage, but not on every product. So, you know, we're quite, you know, selective about looking across the board and saying, "What can have a price rise and what can't?" So I'd say, you know, number of products, high single digits.
Okay. And last one from me. Just in terms of Glue, you know, if we look back, it seems that that banner has been a bit more challenging than we would've thought. Do you think you've finally got on top of the issues, and are you ready to start accelerating the rollout, or is there still more work to be done?
No, more work to be done, Sam. Apparel just seems to be tough all over the place, from everyone else that we sort of look at in terms of our peers. Lots and lots of discounting. Summer, there was... Sorry, winter, there was essentially no winter in Sydney this year, so that's played into some results, I'm sure, for many. So no, mate, we are not ready to roll out. We still have quite a bit of work that we would like to do. We've got some legacy leases that we need to exit. So in short, we're not ready. We've certainly got a plan in play to get on top of the metrics we need to see before we make that call.
All right. Do you think, like, when we speak at the half year result, you'll be on top of it then, or is this more of a longer dated process to go through?
I think it may be a bit longer, given some of the leases are, you know, five, six, and seven years in some cases. You know, we either got to convert some of those stores or exit, and indeed open, you know, a few other stores. We only have 1 store to open in that banner, being Knox City, here in Melbourne. And we just wanna get the model right, and create some differentiation before we decide to go forward further.
Got it. Thank you.
Thanks, Sam.
Next up is Chami. Chami, if you'd like to go ahead and ask your question.
Yeah. Can you hear me now? Hopefully, yes.
Yes.
Yes. Yep.
Yeah. Perfect. Yeah. Hi, Matt and Daniel. Thanks for taking my question. Just wanna focus on Nude Lucy for a bit. I mean, you did talk about apparel obviously running weaker, but athleisure or, you know, Nude Lucy stores are trading well, as you said in your prepared remarks. Could you expand a bit more here on how that brand has performed and also the unique economics of these stores compared to your average stores at the sort of same life cycle, how they compare? Thank you.
I can talk to the product side, and Matt can probably talk to some of the metrics we're chasing there. But, we're very pleased with Nude Lucy. We opened another store yesterday, we have eight planned to open by December one. It's an exciting business. We think we've certainly got a customer that is following that brand, and all the metrics that we can measure are saying to us that we're on the right path. Product it has been fantastic, and the forward pipeline looks terrific as well. So, right now it's outperforming anything we do in apparel, that's for sure, within the business.
Yeah. And to add to that, we previously talked about in terms of the metrics for those businesses, you have to be achieving AUD 10,000 a square meter to be in the game. And you know, if I talk specifically to Nude Lucy, you know, the vast majority, if not all of those stores, are hitting those sorts of metrics, and then the other key piece is the margin. And you know, Nude Lucy, we're achieving vertical margin, and it's not as good as we want it to be yet. However, if you're getting to you know, 10,000+ a square meter on vertical margin, and you can maintain that consistently, it's gonna be a good business, and that's certainly what we're seeing in Nude Lucy.
In Stylerunner, and I'll throw back to Daniel in a minute, because we've had, you know, some great insights into that business over the last few months. The issue in that business over the last 12 or 18 months hasn't been the sales density, it's been the margin. But we're really starting to see a strong recovery in margin in that business, where the sales density has been there, and, you know, that business is showing very good signs.
In terms of Stylerunner, we've reviewed the business, and as Matt said, we've got fantastic sales. Margin has been our issue in there. We've made some moves towards winning with HOKA in terms of sneakers. The market's reacted very positively. We've got amazing support from our brands that supply us sneakers. So if you were to shop our stores now, you'll see us leading with the latest and greatest sneakers for women. And that model is starting to come to real life in terms of what we do moving forward within that banner. But back to the apparel. Apparel has been tough, and Nude Lucy, at least within our business, is outperforming anything we do in apparel.
Maybe, thanks for that. Maybe just on that outperformance, what is the difference in the Nude Lucy brand versus that of Seed and for Stylerunner? If you could just point to what's driven the success there.
Well, I think the whole leggings and athleisure thing during COVID was, you know, it was just what all girls were wearing, all females were wearing. After COVID, that sort of slowed up, so we started to move into different segments. Call it the cafe look, you know, the leggings and the puffer jacket, and now it's gone from, you know, great-looking, you know, stylish pants and the puffer, and we happen to be in the sweet spot there, so we've been building on that. Nude Lucy is sold within Stylerunner and performs exceptionally well. So that gives us even further confidence that the look and innovation of product we've got within Nude Lucy has been a winner for us.
Indeed, when you go to standalone stores, you get the full breadth of the brand. Hopefully, that answered your question, Chami.
Perfect. Thanks for that. Lastly, just wanna focus on August. So just to confirm, August is up 1% while maintaining gross margins, isn't it?
Yep.
Absolutely.
Yeah. How do you feel about that? I think, Sam, touched on this, but just to expand there, how do you feel about it for the rest of the half, and then also to the second half, as we go from here?
I'm not gonna try and predict what might, what, what might happen, Chami. It's a day-to-day. I, I think the, the best way to answer that is, you know, we're, we're cycling strong comp sales, I'd say, right through the first half. For, for retail, generally, November and December was very strong last year, and we were no exception. So, you know, I mean, I, I go back to what Daniel said, we're, we're pleased because product innovation is strong, the product pipeline is strong. So, you know, there's every reason to be optimistic, actually, about the next, six months. Certainly, as we get into the, you know, February to June period, the, the comps that we're cycling become a little less challenging.
But again, it you know just depends with what happens with the consumer and so forth. There's every reason to be optimistic from what we're seeing in August.
Just on maintaining gross margins, do you think you'll be still able to maintain gross margins? More thinking about the second half or some upside there.
Yeah. We There's no question that through the back end of the second half, and indeed, you know, the back end of the first half last year, we were still clearing some of our discontinued brands and products, and that was a headwind on last year's margin. The uncertainty around this year is a little bit to what happens with the currency. So, we've planned for a currency level that's around 0.65. If it's around there, we should be able to maintain margin. I'm not gonna necessarily say that, you know, we're gonna improve it, but we should be able to maintain it. If it's, you know, low 60s, that will be more challenging, and if it gets up above 0.65, then it becomes a little easier.
We don't think we're gonna have the same product clearance issues that we had last year. In fact, you know, on the basis that we've now cleared through all of those discontinued products, that should be a tailwind.
Thanks for that, Matt. And then I'll jump back in the queue. Thanks.
Sorry. Thanks, Chami.
Next up, we've got Ben Gilbert. Ben, if you'd like to ask your question. Ben, if you would like to just go ahead and unmute yourself.
Apologies, guys. Can you hear me now?
Yep, we can.
Morning. Morning, guys. Sorry about that. Congratulations on the result. And you guys, I don't want to be cynical, but you guys did a phenomenal job on costs in the second half, from what I can see, relative to sales. And,
Like, how? One, how did you do it? And two, is it sustainable? Because, like, if I look through the lines, your marketing costs were down, your other costs were sort of pretty well controlled. Your staffing costs, the year-on-year run rates sort of slowed quite considerably. Just could you talk us through what you actually did into the second half, and what you think is sustainable, and where you see some of the pressures moving into this current year, please?
Yeah, no problem. I'll have a crack at that. In terms of last year, and we signaled it right from the beginning of last year, we felt that we'd sort of, you know, grown a little fat through the prior couple of years. We had a strong focus on the support team and making sure that we, I'm gonna say, right-sized our support team, not through redundancies or anything like that, just putting a very sharp and focused lens on, you know, replacements and, yeah, minor restructures where they were needed within the business. So that certainly helped. We have got a good process for managing our frontline team wages and productivity, and we've got a team that is focused on that every day. We make sure we don't overspend there.
Then the other pieces that was a big change was we pulled our distribution expenses for digital. Was a very big focus in terms of making sure that we were getting that optimized both in terms of delivery thresholds, so we raised delivery thresholds. And we indeed also raised our delivery charges where things were below the thresholds. And the customer absorbed those costs last year, which was terrific. So all of that helped the bottom line. And we started to see some leverage. So where comp sales in our business tick above 3%, as they did in the second half last year, you get operating leverage from that as well, Ben.
So that's a little bit not so much of an outcome of, you know, cost management, but just an outcome of those buoyant trading conditions. So that's last year. Coming on to this year, there are cost pressures. I'm not gonna shy away from that. It would be disingenuous not to, you know... It's very clear that the frontline wage costs are gonna escalate by 6%+ this year. And, you know, also well reported that sort of local freight as a distribution cost is gonna go up, and other costs because of inflation. We're gonna continue our drive on cost efficiency as we've had over the last 12 to 18 months.
You know, I'm not gonna say that we can offset all of those cost pressures, however, we're gonna remain very focused on that. And there's still efficiencies to come in distribution, digital marketing, and, you know, in times like this, you just have to go deep into, you know, every sort of cost and bit of waste that's in the P&L and try and find it and root it out. So, that'll be a focus for us as well.
I think it's important to note also, Ben, and a call out to my team who manage our retail stores, the management of rosters has been fantastic. Simply ensuring that the right people are on in prime time hours, allowing us to service our customers better. That's been paying some dividends for us. It's been terrific actually.
Yeah. Really good management in that area. And then the only other thing that I, I'd bear everyone's attention to, we've been going on very hard opening new stores for the last, you know, three or four years. We're not pulling back from that at all, this year, there's no intent to. However, because of that, you can see that last year, for the first time, our CapEx and depreciation were a match. In years before that, depreciation was catching up to the CapEx spend. So we've seen quite significant year-on-year escalation in depreciation on PPE, and that starts to slow as well, giving some operating leverage to the bottom line. So that's another piece that's going on.
That's really helpful. So, so if I just put that together, so it sounds like marketing costs in terms of that run rate, that AUD 50 million bucket, there's still some savings opportunities to drive efficiencies there. Labor-
Yeah.
There's still some productivity opportunities, but it's more we think about you've got that baseline increase, and that flexes around with sales, depending on where they move over the next six, 12, or 18 months. And then we look at the other big buckets through there that obviously you're working hard, but we'll sort of see how they go in terms of other distribution. There's probably still some opportunities, but there's some pressures coming from all places et cetera out there in the market. Is that a fair way to sum it up?
Yeah. Very, very fair way to sum it up, Ben.
Okay.
You've got it.
Perfect. Thank you. Let me just find one more sort of bigger picture one. Daniel, just when you sort of look forward, obviously, you've sort of been through a few of these cycles before, and how do you think about Accent in terms of you've, you've got a lot going on in the business, obviously, it's all going well, big suite of brands. Do you sort of see this as an opportunity to potentially take on more brands, take on more licenses if we move into next year and people get crunched with a currency that's lower and tighter on cash at the start of the year and trading deteriorates through Christmas? Is that how you're viewing it, or are you going to sort of you've got the right portfolio now, sort of knuckle down and try and sort of take share on the way out?
Ben, we get offered brands all the time. It's just a consistent thing. You know, how many brands can we love and do it right? Unless a brand can deliver for, you know, across the whole of Accent Group, i.e., if you take a brand like HOKA. It'll go into our Platypus stores in September. Right now, it's only in our Athlete's Foot banner and Hype. So, any brand that we look at has got to have something like HOKA that can go across the whole business. If you... We think we can do a whole lot more with what we've got. As an example, it's no secret, you know, Vans has done it tough the last couple of years.
It's still very, very strong, but it certainly had come off for the last couple of years through product innovation. But those guys have got a fantastic team, and what we're seeing from Vans should give us upside moving forward. So we simply wanna make what we've got bigger. And all of our forward projections, particularly what we're seeing, shows that we can do that.
Fantastic. Thanks, guys. Appreciate it.
Thanks, Ben.
Next up, we've got a question from John Hynd. John, if you'd like to go ahead and ask your question.
Morning, Daniel and Matthew. Thanks for your presentation. I just wanted to drill down on a couple of questions. Just Nude Lucy. Having a quick look at the website last night and this morning, it looks like you have overhauled the product range. Would you be, I guess that's part of the story now. Would you be, I guess, are you competing directly with Perfect Stranger now? And I mean, that brand's having a lot of success as well at the moment.
No, not at all. We don't see Perfect Stranger as a competitor at all. They are very young, from what I've seen. I think, you know, I've only seen one store, but they are chasing a much younger consumer. Our price point is a bit higher. In our view, we're much more, I guess, lifestyle driven, compared to, you know, fast fashion. And that's the position we want to continue on with. And as we call that, we have two stores in Adelaide coming. So, we're very excited about the sweet spot that we're in, and we won't be deviating from that.
Great. Okay, thank you. And on Glue, just the comments you made about timing, does that mean it's a bit of a... is it an EBIT drag for you at the moment? I mean, it's obviously not performing in line with the, your other, your other stores. Can you give us some, a feel on, I guess, how much it could be underperforming by, or where the upside exists?
John, the best way to answer that is to say that it made a loss last year. Certainly we're not planning for it to make a loss this year. You know, we've got lots of programs in place. We've learned a hell of a lot. We've got a really good team now in that business, running it. Why don't we give you a bit more on that when we've traded the first half?
Yeah, right.
Recycling office. Yeah, recycling-
Yes.
A loss from last year is certainly not our plan for this year.
Well, that's, that's good then. So and then, inventory really, you printed a really lean position for the end of the year. Can you talk us through the strategy looking forward now? And does the inventory position look much different today than it did in, you know, 30 June? And, have you had any impact from the global, I guess, you know, for lack of a better word, disruption at the moment?
I might just talk to the numbers and then throw to Daniel to talk to some of the other brands and what's going on. But in terms of the numbers, we've got more inventory now. You know, we plan to close clean and to have a really, you know, distinct cut-off of the product that was relating to last year, and then the new product we wanted to get in early this year to start to drive the sales. And that new product came in in July, and there's more of it that's coming in in August.
And, you know, typically, we like to peak our inventory, and in this year it will be sort of mid-October, just in time for all of the important sort of cyber period and leading to Christmas. And then, you know, through early January, and then exit January with, again, nice, clean inventory levels ready to get fresh inventory in February. So that's the strategy, if that makes sense. And, we're feeling pretty good about where it is. We're not seeing any disruption at the moment in the inventory we're getting. We're getting everything we need, everything we want, and generally it's coming on time. So...
I think an important to add there, John, the management of inventory overall for our group is so much more sophisticated than it was only two years ago. We're very pleased with the team we've put together with planners. We now have senior planners in each banner reporting to the divisional CEOs. And we're very pleased on what's going on there. It's part of the reason why our dividends continue to be strong. We're simply managing that piece a whole lot better. You know, as CEO, I'd love to have way more Skechers than we've got today. It's just spectacular in terms of you know what that banner can do, and if we had more inventory, we'd be happier.
But then I've got Matt to deal with here in terms of managing me on that side, too. But, you know, the real call out is that the management of inventory across the group is much more, I guess, well managed than I certainly have seen it over a long time.
Great. Thanks for that color. Lastly, on loyalty, I think there's been some investment made there recently. Can you give us some detail on how you use the levers now? For example, was it utilized to clear that stock in the fourth quarter? Or do you pull the lever to achieve the strong like-for-likes in July and August when you've got, I guess, better stock in? How do you utilize the platform now?
It's a combination of both, John, to sort of sum it up simply, what we're starting to get better insights into, for example, is the customer that that shops with us because they like an offer, they like a discount, or they like, you know, they'll shop with us in sale. And so we're able to use it to target those customers through, you know, a promotionally intense period, like May and June, where we were clearing out inventory. And, you know, the leverage that we get with that customer database allows us to get, you know, when we go on sale in June, we-- you get an instant hit. And you avoid marketing to those customers who you know are never gonna shop with you on a discount period.
They're only interested. You know, there's a whole cohort of customers that are only interested in shopping with us on the new ranges at full price. And the better you can identify the difference between those two customers, this is just scratching the surface, by the way, this answer, but it is allowing us to do that. So it allows us to pull both levers with different customer cohorts at different times. And that results in efficiency and marketing savings as well. Because you're not marketing to everyone, you're marketing to people who are more likely to respond to the communication you're putting out. We've still got a hell of a long way to go in this space. We've scratched the surface. We're getting better, but there's a long journey ahead of us.
Great. Thank you very much. That's it from me, and, well, congratulations on the result.
Thank you, John.
Next up, we've got a question from Alexander Mees. Alexander, please go ahead and ask your question.
Thanks very much. Morning, Dan, and morning, Matt. So well done on a great performance in a really challenging conditions in FY 2023. Just my first question, which was with regard to the apparel and footwear equation that you were talking about, with apparel underperforming partly because we didn't have much of a winter. The forecast suggests we're suddenly gonna have a really good summer. Does that mean that you would expect that apparel will start to close the gap as the year goes on?
That's certainly the hope, Alexander. Yeah, well, you'd have to say yes. We have, I guess, completely overhauled our team in terms of, you know, product innovation. We now have more and more brands approaching us with the right product, compared to when we took Glue Store, and indeed, Stylerunner and so on. So we're very... I guess, from what we're seeing, and we don't know what the consumer's gonna do, but right now, from what we're seeing, not only apparel, but also footwear, the forward pipeline looks the best it's looked for a long time, without any of the disruptions of getting products, and timing and so on.
I would hope, yes, that we would see some upside on what we've been doing in apparel overall.
Thank you. Then just secondly, interested in the different behavior between different customer cohorts. And I appreciate it's sometimes difficult to really ascertain this, because you're not asking people for ID. But in terms of the sort of products that you're selling, do you have a sense for whether there's a variation in the shopping behavior of perhaps a younger consumer versus a slightly older one?
I guess, Alexander, you know, we've been quite resilient, or our sector's been quite resilient. You know, we've had new entrants come into the market, and yet our stores, in our view, are performing. We always want to do better. But, it seems that our sector, particularly, sneakers, is just the staple of fashion now. So, where we're seeing a lot of growth is obviously, women's sneakers. We happen to be well-positioned in almost every banner. So we're having, I guess, a bit of a free kick there, which is terrific. And we see from what the brands are doing internationally, that that's a big growth market that we can play in.
And indeed, we've put a lot of OTB that way, and we think we're on point.
Thank you. Then, just finally, any thoughts about the, the changes to the buy now, pay later legislation, will that have an effect on you?
I don't think so is the answer. Alex, to be honest, you know, I think customers will find a way to shop and pay, and I think it comes far more to the offer that you've got. So I'm not anticipating it'll impact us, certainly not differentially to anyone else.
That's clear. Thanks, and well done again.
Yeah.
Next up, we've got a question from Shaun Cousins. Shaun, if you'd like to go ahead and ask your question.
I'm sorry, pardon me. It's Shaun here. Sorry about that. Good morning, Daniel and Matt. Maybe just talk a bit about the footwear industry. Can you discuss what drove the promotional intensity in May and June? Was it just excess inventory or slower sales? And maybe talk a bit about the support from suppliers. Do you get much in that environment? And then maybe the outlook for sneaker industry inventory levels, as trade feedback suggests there's going to be quite a lot of products coming to market in the remainder of the calendar year, please.
I might have a crack at the back end of last year and then throw to Daniel about what he's hearing about the future. The way I would characterize May and June is it was about inventory in the overall channel, not just us-
Mm-hmm
... rather than trying to stimulate demand. That was certainly our approach. I can't comment on how others were thinking about it. However, when you look at what was going on, it felt like there was a lot of inventory kicking around that people needed to get through. So that's how I'd characterize the May and June promotional intensity, Shaun.
I think, Shaun, you know, what you're hearing and reading, particularly in the U.S., I think they've got their own challenges at the moment. It certainly does not seem that way in Australia, and indeed, New Zealand. You know, we're not able to just go out and buy a heap of product at off price if we wanted to. So we don't think it's a major issue and, from our point of view, you know, we're largely out of our-all of our issues that were there last year, and that's why our margins are holding up. So we think it'll continue on that path.
Great. And, just on store network, you've got a track record of conservatism, which is welcome. But can you just discuss the opportunity to open, I guess, stores, particularly the relationship with landlords, what sort of deals you're sort of getting with them, how you're managing CPI, and then within that as well, how the regional stores have performed, which seem to have been a key element of the growth over previous years?
Well, Shaun, you know, we, we're at 800 stores now, so we're, I guess, somewhat important to the main landlords. Our relationships are pretty good. The support's fantastic, particularly when we've got innovation going into our fit outs. Our stores trade well, therefore, particularly in the youth sector, so that's what they want as well, to keep the shopping centers, you know, innovative and so on. We're not seeing any major pullback at all in terms of the support. Indeed, it's very, very strong. The second part of your question, in terms of, you know, we are conservative. You know, we've said at least 50. You know, I'd like to see us do a few more, I suppose.
We are conservative, and where we are opening stores, they're hitting, they're hitting the metrics. Whether that's an A grade or a B grade shopping center, they're hitting the metrics. So we will continue to do that, and indeed, in some centers, expand the footprint where possible.
He asked about the regional stores as well.
Right.
Which is a good one.
The regional stores have been quite strong for us. We're opening in areas that you know, only three or four years ago, wasn't quite sure whether we could trade in these places. The results have been—they've been solid, very solid. So we'll continue to do that. But indeed, you know, my drive is that we have to win in A and Bs, and the Cs will take care of themselves, I guess. That all pulls into you know, our major drive of the database. That's what's allowing us to do what we do, because more and more of our customer base is hearing about the offers we have and the way we show up to market.
Great. My final question is just around HOKA. That's obviously a brand that's got tremendous momentum. What's the opportunity to extend the distribution reach of that brand, please?
Well, Shaun, right now, it is hot. It's hot worldwide. We're just on the coasts of all that. But we've got a fantastic team driving this. It's very strong within The Athlete's Foot business. It's very strong within Hype. We suspect it'll be quite strong in Platypus, as we launch it in those stores in September, October. It's a long runway with that brand. We're being very cautious where the brand goes. We don't need a quick sale. We need, you know, wholesale customers that understand the brand and can market it in the fashion we need it to be marketed. But yes, there is a long runway with that brand, and it's performing very well.
... We're gonna open some standalone stores later in the year as well, Shaun. So, just a few stores just to test the water on, yeah, monobrand for that, for that banner.
That's great. Thanks, Matt. Thanks, Daniel.
Thank you.
Next up, we've got a question from Mark Wade. Mark, if you'd like to go ahead and ask your question. Mark, if you wouldn't mind unmuting yourself to ask your question, if you still have a question? If not, we may move on to Ian McRae. Ian, if you'd like to go ahead and ask your question. Mark, it looks like you've been able to unmute yourself.
Yeah, a bit of a trap there for young players. I think I have it worked out by now, but not quite. So I'm just trying to say on the wholesale opportunity, what are you seeing there in terms of the way those customers are reacting? Your forward orders, that kind of, that visibility of the sell-through. How's that channel performing against expectations?
Wholesale is going well across the board. We called out that last year, it continued to grow strongly. And I've previously said that if you look at the last four or five years, we've doubled the number of stores that we've got in our business, and wholesale's kept pace in terms of the mix of our business.
So it's been strong and, you know, we don't know what's gonna happen this year, but certainly there's a strong pipeline of orders. And you know, the other sort of new brand that we've taken on recently is HOKA. And you know, we're also very positive about the forward pipeline of orders coming through for that brand as well. So, lots of reasons to think that wholesale will continue to grow.
I guess, Mark, that-
Yeah.
You know, we're fortunate that we, you know, we've partnered up with probably the best brands in the world, in our view. And, you know, it's in the sweet spot of where we operate. And as I mentioned earlier, all the brands we do sign up, without any real major rush, we slowly but surely get them to go through all of our banners, so we get the upside as we get it right. But we're very cautious on how we do it. We just don't spray and pray.
Mm.
I guess we put them in slowly but surely, and then market it that way.
Yeah, for sure. And just looking at the opportunity in kind of, I guess, store maturation. So you've laid down, what? 300-odd stores now in the last four years, a phenomenal rate. Now, there was a concern at one point, you know, had that kind of reached maturity? Maybe not concern is the word, but is the opportunity then, for them, do you think, for those that cohort to still mature? Yeah, I mean, yes, sales have grown faster than the store footprint, but is there much opportunity for them to go further up?
Well, we think so, Mark. You know, some in the market were saying that we were mature at 300 stores, and I disagreed. We're now at 800 stores, and I certainly think there's still more growth in many of our banners. But indeed, if you take HOKA, as Matt mentioned, we will open a couple of stores, and we're very confident, based on what we're seeing from around the world, you know, that there's a channel there to open. Fastest growing running brand of the world. Therefore, we should be able to hopefully open more of those stores as we get it right. But no, I don't think we're mature at all.
Sorry, sorry, Daniel. I meant more like just from those existing 820-odd stores, like, can you kind of squeeze more out of those rather than necessarily open more? But just, can you get more out of those existing stores as they mature?
I think that's right, Mark. It's, you know, we're still getting comp growth across the portfolio and, you know, we're also looking at, across a number of our banners, how we expand the footprint of some of those stores and do more within the box. Skechers in particular, you know, the product width and product range that they have, including apparel, that they're starting to get some more traction with that. That's still got a way to go. So, you know, I think there's an opportunity for that as we move forward, even from the existing portfolio. I think that's right.
Thanks for those insights.
Thanks, Mark.
I'll just see if Ian is able to unmute. Ian, if you are able to unmute, please go ahead and ask your question.
Hi, Daniel and Martin. My name is Ian McRae. I'm a 16-year shareholder and footwear retailer, so a big fan of what you've achieved. In the Glue Store, there was a newspaper report, I think in May, that you responded to, to say that you weren't selling it, and that I was supportive of that. JD Sports' performance in Australia has been really impressive. How is Glue Store, how are the Glue Stores going now? And is there an opportunity to grab market share from JD?
I would love to say yes, but not that easy, Ian. JD Sports, I mean, they're, you know, they're a very, very strong force, particularly in apparel. They are chasing what we call the lad. They're very strong in that space. In terms of what Glue does, well, we're not chasing that same consumer as such. If you look at our stores, the brand portfolio that we have in there, I don't think any of those brands are now sold within JD Sports. Or if there are, we will simply move to a different segment. We're more after the fashion-conscious, I guess, teenager, rather than what we call the lad, which is the tracksuit look and so on. That's not where we're going.
So I think they're two different customers, to be totally honest with you, Ian. So we don't really see that we're up against them in the main.
Okay. And if I can just ask one more. Is there sufficient product differentiation in the assortments at some of the different retail labels? And I'm specifically, maybe say, with Platypus versus Hype. Otherwise, a big step to what you guys are doing.
Absolutely. Particularly now, Ian, we spent a couple of years making sure that segmentation was prime in our minds. If you go to a Hype store today, some of the biggest brands that are sold in that banner do not even exist in the Platypus business. Certainly in the segmentation area. If you take Nike or Adidas, Hype have got a higher segmentation, higher price point. Whereas Platypus, we're quite happy to have the commercial version of those shoes, given the size of Platypus across the country.
Okay, thank you.
Thanks, Ian.
We have no additional questions at this stage, so Daniel, I'll pass it back to you for any additional remarks.
Well, I thank you all for taking the time to call in today. We will see you soon and hopefully deliver another strong result. Thank you.