Welcome to the Accent Group FY 'twenty one Full Year Results Investor Call. We have Daniel Augustinelli, Group CEO and Matthew Durbin, Group COO and CFO with us this morning. We will open for questions towards the end of the call. So please listen out for your name as you are introduced through to ask your question. Thank you, Daniel.
Over to you.
Thank you. Good morning, everyone, and thank you for taking the time to attend the call today. I'm joined on the call today by our group CFO, Matthew Gurden. We will now take you through the results of the full year ended 27th June 2021, an update on our growth plan And a trading update for the 1st 7 weeks of this year. There will be an opportunity to ask questions at the end.
If I can now refer you to Page 4 of our investor presentation, which was released to the ASX yesterday evening. Agsoon Group has delivered another record year of profit with EBIT up 32.1 percent to $124,900,000 and net profit after tax, up 38.6 percent For $79,900,000 I am delighted with the results. And 1st and foremost, I would like to We acknowledge the performance and contribution of the entire
Apologies, we've just lost the host line. Please hold, and I'll connect them through again. Thank you so much for waiting. We now have your hosts, Matt and Daniel, back on the line. Please go ahead, Daniel.
Apologies, guys. Some technical issues. I'll start with Accent Group has delivered Another year of record profit with EBIT up 32.1 percent to $124,900,000 And net profit after tax, up 38.6 percent to $76,900,000 I'm delighted with the results. And 1st and foremost, we'd like to acknowledge the performance and contribution of the entire Accent team for their efforts Throughout what was a highly disruptive year. The group's strong focus on VIP, vertical and virtual, Along with our integrated digital store operating model, has delivered another record trading net profit.
Turning to Page 5. Some of the key operating highlights for the year include record sales of $1,100,000,000 Exceeding $1,000,000,000 for the first time. Digital sales growth of 48.5% on top of the 70% growth Achieved in FY 'twenty. Online sales grew to nearly $210,000,000 Opening 90 stores, including new store formats. Growth of 1,600,000 new contactable customers.
Our database is now at 8,400,000 contactable customers. Continued growth in performance in Star Runner with 4 stores now trading and strong results from Starzana Vertical Products. The acquisition of Glu Store and Trade Imports, which provides a very strong foothold in the Australian waste apparel market and a 100% growth in vertical owned brands to $25,600,000 and the extension of our key SKECHERS distribution agreement by 6 years to December 2,032, demonstrating the strength of the partnership we have with them and the Sketches' confidence in action in the A and D market. I will now hand you over to Maxi Berdan to talk about the details of the results. Thanks, Daniel.
Turning to digital on Page 7. A key highlight of the year was the continued growth in digital With online sales up almost 49% for the year, representing 21% of sales. This is on top of the nearly 70% growth Shared in FY 2020. Part 2 Digital Growth of 16% was achieved again with significant growth in Half 2 FY 2020, comping the impact of the 140% growth experienced in the COVID disrupted quarter 4 last year. Our digital infrastructure, which includes a flexible store or warehouse fulfillment model and multiple customer delivery offers, Continues to deliver a competitive advantage.
The average customer delivery time through our normal channels is less than 2 days And we've been on our way through our various Express channels. Seasonally, we continue to see year on year growth in site traffic, conversion rates And average order value. Onto virtual and VIP on Slide 8. Our contactable customer base grew by 1,600,000 customers with 8,400,000 customers, which continues to be the result of a strong drive to invite customers to join in store, Also our new Skechers loyalty program and then the athletes fought the strength of our market awards program. The New Skechers loyalty program launched in May with strong early results.
250,000 new customers joined the program in the 1st 3 months. With a standing start in April last year, virtual sales given through calls, chat and the Hero Video app Have grown significantly, achieving sales of $6,300,000 in the year. A new customer experience in virtual sales hub Featured on the slide, launched in May this year. Moving on to vertical on Slide 9. The company's vertical product program continues to gain momentum with sales of $25,600,000 up more than 100% on the prior year.
This result excludes the Accent Lifestyle or Glu, which generated an additional $2,000,000 in vertical owned brands sales just in June. The key drivers of growth in the vertical are Styron on the label, Alpha, ITMO, the soft program across Platypus, the athlete's foot and height and the athletes for Performance Insights. The company now has 10 vertical brands and is targeting at least $70,000,000 in for owned sales in FY 2022. Moving on to retail and wholesale sales on Slide 10. Owned retail sales were up 19.6 percent to $835,000,000 with strong growth from digital new stores.
Inclusive of the TAF franchise stores, the group now operates 6 30 out stores, including 31 websites. In the retail banners, high density, the athletes group, Tata Bus, Skechers, Trades, Vans and Doctor. Martin's With standout performers with all other banners trading broadly in line with expectations. During the year, we opened 90 new stores across all formats And closed 7 stores where sustainable renewal terms could not be agreed. The acquisition of Blue Store added 22 stores to the group And an additional 9 websites across the acquired vertical and distributed brands.
The chart on the right I can demonstrate the continued growth in our store network with the breakdown provided on Page 17. Moving on to wholesale. Wholesale sales were up 22% to $132,000,000 which is a new record for Accent Wholesale. New brand distribution agreements were signed with Herschel and HOKA during the year with sales from those agreements to commence in half 2 FY 'twenty two. We're also pleased to report the early renewal extension of our key scheduling distribution agreement, which has been extended by 6 years to December 2030 2.
Turning now to our growth plan update on Pages 11 to 14. Our growth plan is well on track And helped to deliver an under year of record growth. The Star Runner strategy on track with full stores including online now trading. Digital sales continue to grow. International shipping to the Eurostar, Singapore and Hong Kong is now available with strong early results.
There is significant focus driving our vertical product mix through Starliner Belabel, Starliner Accessories and Exi. And both brands have grown to around 20% of sales through Star Runner. Gross margin in Star Runner continues to improve due to this increased vertical mix. The results from the first three concept stores in Auburndale, Rubenah and Miranda have been strong, and we expect to have 20 stores trading by early calendar 22. A total of 40 store locations have been identified to be trading by Christmas next year.
We are targeting a network 60 7 in Australia and New Zealand within the next 3 years. Turning on to Glue Store and our new Accent One Side division. We've provided a strong entry in the Australian New Apparel market. Significant work is underlined gross margin improvement, leveraging broader accent capabilities, Including continued growth in our strong portfolio of vertical owned brands, which are targeted to grow to 40% of sales over time. A new world class store concept has been developed before new stores signed and to open with this new design concept before Christmas.
We're targeting a network of at least 60 stores by 2023. Digital continues to grow strongly with ongoing investment And our integrated omni channel capability and customer engagement initiatives. Digital sales for FY 'twenty one represented more than 20% of sales, giving us confidence that we are on track to achieve 30% of sales over time. This result is particularly pleasing In light of the strong digital margin growth achieved and the significant number of physical stores opened during the year, The project to build and deploy new websites for our major bank and it's on the latest Magento 2 platform is well progressed with a new heart site to launch prior in November and other sites, including products and sketches to roll out progressively through the year. These new sites will provide further benefits in site spending capacity, Driving improved conversion rates.
A new virtual sales hub was operational in May, providing Structured a virtual video shopping experience for customers across our major banners. We're targeting virtual size of more than $10,000,000 in FY 'twenty 2. You're right, Pammability. With contactable customers of $8,400,000 we're well progressed towards that target of 10,000,000 contactable customers. And the Skechers loyalty program has been well received with 250,000 new members to this program since it launched in May.
Platypus and Hyatt Loyalty Programs will launch in FY 'twenty two. New stores. The pipeline of new stores remains strong, with at least 65 new stores expected to open in FY 'twenty two across all banners. This program reflects the continued quality of the deals available and our rollout plans for Style Runner and Blue and Momentum. New store performance where we're able to open the line continues to be strong and ahead of the plan.
The Afford's franchise buyback program continues. Retirement still has been progressively acquired. The Afford's foot had a record year Sales and Profit. Vertical. Our vertical program continues to gain momentum With FY 2021 size of $26,000,000 This is expected to grow to more than $70,000,000 in FY22 The Accent program gains momentum and with the new sales growth from Starlight on the label, exi, live for department and Accent Lifestyle, including New Lucy, Beyond Her, Lilly and Rose, Henley, Article 1 and First News.
Starting to continue to grow on this product as we grow volumes and improve our medical sourcing capability. We anticipate vertical sales will grow at least 10% of sales, well ahead of our original time line. Pivot and Try. The Pivot store rollout is on track The shift in store's expense is beyond by December. Performance in Tribe has been strong with 66.4% sales growth for the year.
The tribe of Storweller has recommenced and will ramp up in FY 2022. Turning to Slide 15 to discuss the trading update. The Board have recommended a final dividend of $0.035 per share fully franked, bringing total dividends for the year to 0.125 cents per share, a 35 foot percent increase in the prior year. In recommending the final dividend, the Board determined that no residual waste subsidy funds We're required to use or use the account to calculate or pay the final dividend. Indeed, these will have been fully deployed by July.
Trade in the 1st 7 weeks have been impacted by store closures due to government mandated lockdowns in Victoria, New South Wales, Queensland, South Australia and the ACT. The group currently has more than 3 50 stores or 55% of its portfolio closed for trade. In most cases, they're operating as dark stores for filling online orders. As a direct result of these closures, NFL sales, Including digital for the 1st 7 weeks were down 16%. Digital sales in the last 3 weeks with both Northern and Sydney closed have ramped up The last 66.4 percent on the prior year.
The company estimates the impact of group EBIT of the COVID related store closures across July August, we at least managed $15,000,000 to expectations. This impact is the result of both lost sales And the impact to gross margin and driving sales and ensuring that inventory levels are appropriately managed. Company has implemented a range of inventory management cost saving measures across the business. Having said this, we're also continuing to invest for the growth and the future in new stores, digital capability and our new business formats. Due to the continuation of COVID-nineteen In that current uncertain environment, the company will not be providing guidance for the full year.
I'll hand back to Daniel now to wrap up. In the current environment, we remain cautious and expect the current lockdown situation to be temporary or in the near term. Our digital sales are growing strongly. We have a strong conservatively geared balance sheet, and we have confidence that when we reopen stores, The name will be very strong, and we will be well positioned to accelerate the strong inventory levels and many new stores. We are very excited about the opportunities ahead for both our core brands and the growth path for Sky Runner and Clue, which are both planned to ramp up over the coming 12 months.
That concludes our presentation today, and we'd be happy to take any questions you may have.
Thank you. The question and answer session has now commenced. On their telephone keypad now. We have our first question from Sam Tighe from Citi. Please go ahead, Sam.
Good morning, guys. Good morning. So apologies for the technical difficulties earlier. Did you manage to speak out on okay? Yes.
I'd like to hear it. Thanks very much, Matt. Just a bit of an update around the latest round of landlord negotiations. And to what extent Yes. I think you're going to be getting more back into deferrals.
And given what's happening, what do you see as a fair outcome for both retailers and landlords? Sam, at the moment, landlords like us are not quite sure when all this will end. We've had lots of dialogue with all of our landlord partners. And at this stage, it's essentially packed to figure out How long this will go for? But in all circumstances, we are both looking for a fair outcome both ways.
We assume it will be no different to what happened in the earlier lockdowns of 2021. So to be honest, we've no real update on anything at this stage, but we are very working very closely with Thanks, Daniel. And then you say that it's currently parked Given the fact that the stores are closed, are you paying 100% of the rent at the moment? How do we think about going to cash out for rent Given the store is closing, consumers are unable to shop. No, the landlords have simply asked us to just She's paying rent on those affected stores, and we're working through a program To come up with some sort of amicable outcome in the coming weeks, actually.
That's good. Sorry, Tali. The $15,000,000 impact to July August, that's implying some type of step up in discounting. Can you maybe quantify and talk a bit more about how discounting depth and breadth compared to last year? And I guess, when we're thinking about FY 'twenty two or at least in the first half of 'twenty two, given the discounting going on, is it fair to say that gross margins A lot of it is below PCPs.
Yes. Good question, sir. And to give you a sense, sort of for the last 3 or 4 weeks McMillan and Sydney both closed. We've been driving Customers to the online sites, and the best way to do that is to offer deals. This time last year, We were pretty much at full price for that whole period.
I'll call out a number. Our retail margins when we're at full price tend to run along at about 60% Gross margin. And it's fair to say we've been in the low 50% for this period to give you some sense of the magnitude Of the impact on gross margin. It's a little unknown about what happened. Yes.
Right now, we are planning that lockdowns fairly comprehensive lockdowns are likely to continue for September Turning to October in the case of Sydney. And we anticipate that we'll continue to need to drive a high level of discounting in the prior year To make sure we keep our inventory levels in check and that we don't end up in any aging issues as we get towards the end of the year. So I think it is fair to say that margin will be under pressure because of that, Sam, but it's too early to tell where it's going to land. Got it. Great.
And just in terms of Pivot, just wondering if you could talk a bit more about what's happening in that business. It feels that While actually still committed to Pivot, it's probably been put to the bottom of the pile below some of your 100 growth Appreciate that Pivot maybe has less opportunity for vertical products compared to its style runner, but Maybe if you can just talk a bit more about what you've seen from the EBIT, what you've learned from it, any other issues the team is trying to work on. Yes. Sam, essentially, Core Oil Pivot has been closed virtually since we opened it. I mean, it's been in and out of Some sort of a lockdown the whole way through.
It's essentially 12 month existence. But what we are seeing is that the out of stores, in particular, have been quite strong for us, and we're able to achieve Very favorable commercial terms to run those stores. And indeed, our growth plan will be Definitely more a year out of stores. In terms of priorities, well, like everything else, We've always maintained that we're throwing out a heap of our bullets. Whichever one lands on target will be the ones that we'll push As priorities.
Pivot is still one of those bullets, but obviously, the growth of Star Runner and Glu We've sort of taken priority at this stage. We still will we are still opening Pivot stores. And as maintained, we will get to a certain level of growth and determine What we do next moving forward. But once again, I want to reiterate where we've opened up in what we're calling country type areas, the stores have been quite strong. Right.
So when you say out of stores, you're referring to country areas. Yes. Yes, exactly. Or what we're calling CEO. Probably see great synergies where there's essentially no operators selling sportswear and so on.
Thanks very much. Thanks, Ben.
Thank you. Our next question is from Sam Haddad from Bell Potter Securities. Please go ahead.
Hi, Ben. Hi, Matt. Hi, Ben. Just a question on the supply chain. If you hear some noise in the news about disruption, Can you give us some color from your perspective on what you've seen to your channels and what the risks are?
Yes. Sure, Sam. I'll take that and then hand it to Daniel. So far, we're hearing that there are Some delays. We're certainly experiencing delays because of shipping.
It's a couple of weeks. It's not Everyone would be aware of the issues with COVID in Southern Vietnam and China. We are hearing that there will be some delays and some small cancellations from some key brand partners. Right now, we're not anticipating any significant impact. Our inventory levels are very healthy at the moment, and the inventory is Current, and we've got a strong pipeline coming through.
So that's sort of how we're saying it. It's not massive for us as you're saying it. Daniel, I don't have any more. No, not a whole lot to add to that. We're very close in to our 3rd party Supplies and indeed all of our factories making our vertical.
And of course, there's 1 in 2 weeks delays, that sort of stuff, but Not enough for us to have any concern at this stage. Given the uncertainty with COVID and what that could have I think that's on disruption to supply chain. I know things are okay at this stage, but we've had Bob, both of mine. John, slightly on the heavy side on inventory, about $30,000,000 or so. Is that a blessing in disguise given potential risk Nonetheless, that may be a little bit.
Yes. Look, Sam, you never necessarily want to be sitting on more stuff than you have. Think your assessment is fair in terms of sitting on the heavy side of the mine. I think it places us well. And in fact, if delayed out of China Increase as we get towards November December, we'll be very well positioned.
As I said, that inventory that we're sitting on is very current. In fact, the majority that's arrived in the last 4 to 6 weeks. And it's in our stores. Unfortunately, we haven't been able To show up 1200 customers in stores after that period. Sam, the majority of The €30,000,000 you talk about, 2 thirds of that is in what we call core.
We've chosen Not to discount that product in any channel, so we're happy to hold on to that product given that we're quite optimistic When lockdown is due and that we should see a pent up demand. The overall planning team has done a spectacular job in managing with the rest of the team managing our What we call cringey stock, which is what we call dairy age stock, and that's the cleanest that's been basically forever. And just on that $15,000,000 guidance, dollars roughly $15,000,000 in terms of the impact, that's for July August to the end of August only. Is that correct? That's correct, Sam.
That's our estimate to the end of August. So it doesn't pick up what might happen In September, October, etcetera. Okay. Yes, okay. And just final question from me.
Just some color as what you've achieved so far with Goodifor is it said that you're clearly pretty pleased with the progress in the 1st 20 days. What's been achieved? Sam, well, 1st and foremost, we're delighted with the acquisition, but certainly the good news is that we've got a Fantastic team in that business, led by a very strong CEO with Darren Todd. What has been achieved is that we have now developed a new concept, Which would open in Chadstone. We'll hopefully open in Chadstone in the next 4 weeks.
We've signed a third of 3 stores To all open by December, we will refit our Melbourne Central store and we will refit Our High Point store, which are key stores for the business. There's been further strength in back end functions. We have a team that will soon need our overall computer system over to April 'twenty one And indeed, working on cleansing our inventory and further Hamptonsizing terms with all of our main suppliers. So there's been a lot going on in the short time. We've had the business.
Online sales for Glu have just been fantastic. So it gives us A great platform to sort of leapfrog as we move forward with this business. The other pleasing new standard in the blue business is that it houses 4 or 5 vertical brands, 1 in women being nude, Lucy. It's super strong. And the full pipeline of product looks very, very promising.
I'm sorry, just one final question from me. With the 65 stores that you flagged and with negotiations with landlords still ongoing, is that tied to successful negotiations? Or Can you fill up in those stores if there's still delays in those negotiations being agreed to? Well, I mean, yes, they are tied to ensuring we achieve the right terms, commercial terms, We've got landlords who really want, particularly Star Runner and Glue, across the country. So we feel very confident that we will succeed with that program.
Yes. If we were open, we'd probably be going faster again. But right now, we're not. So we're kind of preparing And being optimistic about 2022. Sam, to add to that, I don't think the negotiation On the payments, we'll hold up to 65 stores, if that's what you're asking.
We're going to get the 65 stores that we need. And Daniel said earlier, we're confident we'll get our outcome on the payments. It's just going to take a bit of time. Okay. That's helpful.
Thank you. Thank you for your time. Thanks, sir.
Thank you. We currently have 8 guests waiting in the question queue. Our next question is from Kegan Boysen from Jarden. Please go ahead, Kegan.
Good morning, guys. First one for me. On the inventory position, it looks like you guys are planning for a strong growth in the Q2 in the Christmas trading period. Do you still feel pretty comfortable with the level of inventory Last couple of weeks of lockdown and uncertainty around demand. Yes, that's a good question, Kegan.
And I think the answer is there's a lot of uncertainty. We're not worried about our inventory levels at the moment, and we're very, very well positioned. Yes, we're hopeful that as we get into November December, stores will be able to reopen. And we think If it's anything like previous, we're still as we are, and demand will be strong. So as we sort of talked about earlier, we're sitting Heavier than we might otherwise have planned to be because of the sales shortfall we've experienced with some stores closed across July August.
We're also taking measures to make sure that inventory level is managed through this period according to the circumstances that we're facing. I hope that helps. Yes. Yes, sure. And then that $15,000,000 cost you spoke to on July August, is that the sort of run rate we should Expect if lockdowns continue the way they have been?
I think that's a fair assumption as well, Kegan. I think that With Victoria and New South Wales closed more than 50% of our stores, it's reasonable to That run rate continues. If Melbourne opens up as we get into October September, my apologies, then it might be quite as bad. Second one, how are you guys thinking around investments in the current brands and store growth that's adding more brands to the portfolio? I mean, Are you looking to continue looking at the brands with more than apparel, Stew?
I think the Blue acquisition provided us with a really Strong portfolio of owned vertical brands along with Sky Runner and Exi. And right now, we feel as though we've actually got a very, very strong portfolio of brands in that space. And with Glu, A really good channel to customers, direct channel to customers. So I think right now, we're going to focus For at least the next 12 months on what we've got and capitalizing on those moves that we've made. And Star War, in particular, In the active Westpac, he's just gone really strongly for us.
Daniel, I don't know if you want to add any color to that. No. But also in terms of third parties, Kevin, we have there's many people approaching this at the moment Unless it makes sense and it can be 1st and foremost vertically sold We're semi vertically sold through all of our banners. We tend to not entertain any of those discussions. 1 I can point you to is the new HOKA Brand signing, the first sell for us has been particularly strong.
So when those sort of opportunities come around, we will certainly entertain those discussions. Thanks. And then just last one for me as well. Just wondering how you're thinking about New Zealand a little more, particularly around which of the brand and your portfolio have the most And what we can expect from a store growth perspective, particularly around the split between Australia and New Zealand growth terms? Well, New Zealand, in general, has been super strong for us.
We probably don't call it out enough. It's It's a very solid business for Accent. We're currently at 77 stores there. We will be at 100 stores, If not by December 1, shortly after or early in 'twenty two, we will open our 1st Stall Runners store In November in New Zealand, we feel there's a lot of runway for that brand in New Zealand. We'll have an operating website there shortly.
And indeed, Glu Has a lot of potential to grow in New Zealand. How many stores at this stage, we don't know. But I'd be unhappy if we couldn't at least do 20 of each of those 2 banners alone in that country. On top of that, we have not opened the Tribe store in New Zealand yet. We're currently in negotiations, but we feel Tribe has got some runway in New Zealand Sure.
Fantastic. Thanks, guys. Thanks, Kean.
Thank you. Our next The question is from Ray Tolson, who is a retail shareholder. Please go ahead, Ray.
Good morning, Daniel and Matt, thanks for letting the retail keyholders have a quick bit of time. Just one Thank you. And with all that rapid expansion and diversification and quite apart from during COVID, we're surely going to be a risk that Well, it's getting out of control given the number of moving parts requiring attention. How are you coping with all this? That's a great question, Ray.
I'll take that first and then hand to Daniel for a bit more color. We did an executive team restructure Here early in the year in February, March. And we aligned our executive team here around business lines. Previously, we were working cross functional lines. So we've now got a stand alone GM Responsible for each of the banners, who's able to drive that business as if it's their own.
And then we've got shared So that has absolutely helped make sure we keep laser sharp focus on each of these different businesses we're driving, right? I hope that helps explain how we're currently managing that at the moment. Yes. Good strength in that. In our humble view, we've got the best Retail team around us, and I've got a very capable can do GM team that drives each banner, as Matt mentioned, day in, day out.
And that's been a very strong move towards how We're actually growing the business in these different areas. Okay. And Jeff, just couldn't help you work in 24 hour days. 23, right? 20.
Okay. Thank you. Thanks, Ryan.
Thank you. We have our next question from Ryan Niroshi from Barren Jolly. Please go ahead.
Hi, guys. How are you? Well, I'm sorry to have one about the inventory, Takeda. Just in terms of committed orders for the next few months, Is the current inventory that PACE will be at? Or are there more orders or inventory to land over the next few months into Christmas?
Yes. That's a good question, Harry. So there are more orders coming through. There's a continuous pipeline coming through. Our inventory levels would usually peak around October going into November, cyber, and that's how we would usually plan it.
And we can anticipate that they will peak in October. And Sam had previously called out a $30,000,000 Sort of inventory overage to what we would have originally planned, and that's sort of where we're expecting it to take €30,000,000 more than we otherwise would have liked. However, we're not saying that that's going to cause any issues, and we're just staying balanced about how we move through that inventory pushing Yes. A bit of additional promotion through our website. Cool.
So sorry, the $30,000,000 wasn't So is that €39,000,000 at the moment you've got over than what you would like to? And then you're expecting that €39,000,000 to continue into October in your pay cover. Is that right? Correct. That's correct.
Yes. Yes. Yes. And just a clarification, on margin, a good color And the gross margin about 50% versus 50%. Is that your realized gross margin in the 1st 7 weeks versus the last Anton, last year?
Or is that just a hypothetical? What was that, Daniel? Yes. Look, I'm not going to call out specifically what we realized. Wanted to try and illustrate that there's about a 7% differential that we've experienced in the 1st 7 weeks, so 60% to sort of low 50s.
That's sort of the differential that we're experiencing in this environment. Perfect. And just in terms of Good morning, the group. I mean, what gives I mean, obviously, recently acquired that business. What gives you confidence around sort of That's tripling or nearly tripling the store count.
So have you seen any performance in terms of early trading momentum, customer Sir, Dave, what's giving you that confidence to go with that target, please? Yes. I think there's a couple of things that give us confidence. I'll take that first and then hand to Daniel. That chain used to be a 35 store chain and indeed Hasn't had any proper investment in store development, new store rollout.
They've been closing stores rather than opening them. We don't think at all, and this fit into our acquisition thesis, that, that is at all a function of lack of demand in that segment. And indeed, those stores in good centers for Gloo, even though some of those fit out, so it's sort of 5 to, in some cases, 7 to 8 years old, Those stores are still doing very, very good numbers at the time of acquisition. We had pulled inside into that. If you take There's other change in our space.
They're already got to sort the numbers and our view is we've just got to get in the game and compete the way we know how to. With a terrific team over there. It's a great brand portfolio and we don't see why we shouldn't be able to take out share in that segment of the market. I'd be really to add. I mean, that's exactly it.
And the momentum we're seeing, particularly with the vertical Brands in that business, it's showing solid growth. We will also renegotiate Some legacy rents where we have stores expiring. We may have indeed closed some, but we will certainly accelerate the opening of those in 2022. Perfect. And final one for me, please.
I appreciate you don't want to give sort of color around regulatory from Just in terms of states that are not locked down at the moment, how are they performing? Is that pretty much in line with their run rate in the second half? Or Is that sort of softer as well? Yes. No, it's pretty much in line with the run rate in the second half.
So Western Australia, which hasn't really been impacted. It's been business as usual over there. We're seeing strength where we're open and open consistently. There's certainly impacts. I mean, it's almost difficult because there's been that many shutdowns, but certainly in South Australia and Western Australia, And so business is usual either now.
I think it's important to also I think it's important to also call out that when we come out of a shutdown or a lockdown, Business doesn't just bounce back the next day. It normally takes that 4, 5, even 10 days before our customers get Confidence to get back shopping with the shopping habits. But what we've seen when we do come out of lockdown to date. And indeed, what we're hearing from international operators is that it has been strong, And we expect it's going to be stronger going. And sorry if I can sneak one more in.
Just in terms of the second half 'twenty one gross margins, they were below That is pre COVID. That was in Daniel on the air. I would have thought most of that half would have been quite strong in terms of Paul, I'll tell you. So what was happening there is just a pure online mix. Yes, that's a good question and a good pickup.
The answer to that is As we got into late May June, Melbourne went into lockdown. And in fact, in June, Sydney went into lockdown. And this sort of drive we've had to online and digital actually started back in June. So that certainly had an impact. We also wanted to make sure that we started this year with our Aged inventory in crystal clean shape, and that drove us to making sure that, that inventory is all correctly priced through June, which came at a cost of margin in June.
That's perfect. Really appreciate that. Thanks. Thanks, Ali.
Thank you. Our next Question is from Navin Patna from ENT. Please go ahead, Navin.
Good morning, guys. My question was around Star Runner and Glu. I appreciate that Still pretty early on in terms of the rollout, but we've clearly seen some positive signs. I mean, how should we think about the new economics So of these businesses versus your more established brands in terms of items like the revenue per store or just generally the profit margin I follow these brands versus your more established brands. Yes.
It's a good question, Ben. We haven't talked too much about I won't talk about Glu today, given how new it is, given we've got a seat. We've still had a lot of shutdowns in that network. I'll talk a little bit about Star Runner and we had previously. So we're seeing Star Runner So, density is strong and in line with best practice.
So, the average Size of the Stallion store is about 200 square meters. And you can assume that we're achieving 10,000 of sales per square meter plus Out of those banners and in the better side, it's higher than that. And the other thing to note is Our call outs on vertical in Star Runner and the Star Runner product having grown to 20%. And you can assume we previously called out that vertical margins run at 65% to 70% Compared to a 3rd party margin running at 50% to 55%. So you're talking about, over time, Yes, a strong 10% margin differential.
We still need to grow out the Starline of the label, Exy within the Starline of BAMAs, The margin is certainly growing, if that makes sense, on the human economics of those. In terms of glue, we need more time on that, And we made to have a period where we've got our stores trading. And we've got a big drive In that business to Vertical Brands as well. And as Daniel alluded to, we've also harmonized the trading terms For going to our growth terms, which will also improve margins in that. We'll make some more time.
Okay, great. That's really helpful. And just a point of clarification on Star Runner, you talked about 20 So we're signed and ready for early next year. Are you referencing an early calendar year or financial year? Yes.
For the 20 stores, it's early calendar 2022. So sometime January or February. We're hopeful that it might even be before Christmas, but we're just not sure if we've not counted and so forth. Sure, sure. All right.
Thanks guys. Thank you.
Thank you. Our next question is from James Bannen from PAC Partners.
Good morning, guys. Can I just ask you to put some color around the Another major variable or big variable in the mix here, and that's the employee benefits line? In last year, you banked 24,000,000 Hi, JobKeeper. So two questions, I guess, from the back of that. 1, if that wasn't there, what sort of steps would have been taken You need to get the impact on the bottom line.
And secondly, the current version of Schlotman and Mark Truly, what sort of impact is that having In terms of flowing through the accounting, that's supposed to be going direct to the employees. Yes. Good question. So just to pick up quickly on last year. We've made a fairly clear statement that we felt all of the JobKeeper funds had been fully deployed Last year and ending by July.
So we feel as though the net benefit across the year Of those JobKeeper funds, to have bottom line was actually 0, if that helps. In the first half last year in our accounts, We called out a net benefit of $9,000,000 in the first half. But in terms of keeping our team stood up, we kept our entire permanent And stood up through the second half, through the various lockdowns that occurred in the second half, and that fully deployed the remaining $9,000,000 across that period. In terms of what we would have done if we hadn't had it, I think that's a theoretical question. We probably won't answer that, but let's move to What we're doing at the moment.
So it's fair to say that with New South Wales and Victoria all closed in store, We have got our permanent teams in those stores working 15 hours a week. So they're still working in our stores The demand is there for filling dark store orders, fulfilling online orders. And all of those team members are able Take advantage of the public government subsidy, which is going directly to them. And based on our calculations, they're broadly in the same position From a cash perspective, if not a little better off, but there's absolutely no benefit accruing to Accent From those from that government subsidy, it's going straight to the employees as it should, and our team members are benefiting from that. We can also add that our entire support team is currently stood up regardless of the shutdowns, And we're doing our best to ensure that, that continues.
Yes. Thanks very much. Thank you.
Thank you, James. Our next question is from Sam Tighe from Citi. Please go ahead.
Just one quick follow-up. You have the 65 new stores that you're planning to open this year. Given lockdowns at the moment and the fact that maybe some You know, cities and fixtures might be delayed given they're on boats. Is that likely to be skewed towards the second half? Just Kind of get a sense of the impact that lockdowns have on the ability to open stores in the kind of time that we had planned.
Sam, look, a good question, and that's something that we're trying to use all the time. But We actually got ahead of the game, seeing some of this occurred where we ordered, particularly in the main banners, Platypus, Skechers, Doctor. Martens and all the as we were shining stores, we were ordering fixtures in bulk. In the main, those bulk We've secured a lot of room in Australia and New Zealand awaiting for handover dates from shopping to the landlords. So from our point of view, It will be as it would have been in the first place, and there will be lots of openings in the first half.
Thank you, Sam. We have Our next question is from Joe Whittle from Morgan. Please go ahead.
Good morning, guys. My question has been answered. But just on General Pants, obviously, there's a confidential process going on, and We're very optimistic about Glue. Could that be of interest to you at a price or too much overlap?
So too much overlap. So we're looking categorically say we're not involved in the process and why it be.
Perfect. I'm sorry, just wanted to reiterate. So you're saying, Daniel, twothree of your product, which is core, you haven't been touching in relation to discounting. So It's basically onethree of your product driving the GN down 7% year on year.
Yes, yes. Yes. That's fair, John.
Yes. Yes. Okay. And was that would it be fair to say that a chunk of that stock was more legacy or aged and hasn't come on into the country in the last few months.
No, no. It wouldn't be fair to say that. We cleared all of that aged stock out in May June last Yes. So the stock that we had been working on stock that we otherwise would have had at full price through this period, if that makes sense.
Yes, perfect. Thank you. And just lastly, sorry, I keep saying that. Star 1, it seems like you've got some early wins there internationally. Can you just give us a bit more color there?
And I mean should we be priming ourselves for some kind of physical launch? Or do we need to get Australia locked away and just run the digital for now.
Yes. Look, I think as you said, Joe, we've dipped our toe in the water. Shipping, it's a long way from shipping to internationally to doing anything else. And primary focus is in Australia, particularly for the next 12 months. And yes, digital is clearly the sensible way to approach international markets in our view In the first instance.
Thanks, guys. Appreciate it.
Thanks, Joe.
Thank you. We have our next Question from Quinn King from Q&N Investments. Please go ahead, Quinn.
Yes. Hi, Daniel and Matt. Congratulations on bringing you on some really strong results. Well done. My question is just being answered in regards to Stylarunner And international shipping to U.
S. And Singapore and whatnot. Maybe if you can just expand on where do you see this brand out of season in 5 years' time? Daniel, I'll not let you take that one. Well, currently, I mean, runway, we've got lots and lots of runway in Australia and New Zealand.
We definitely want to cement that And particularly, ensure that the vertical piece continues to do what it's doing now with further growth. We're very happy with what's going on with that vertical piece in that business, which Really gives us lots of confidence about what this model can do. In terms of what we see in 5 years, well, Yes. We'd love to have a very, very strong website, particularly in the U. S.
And places like Singapore and so on. And taking some learnings from other retailers that have done that. Some stores could follow, and that would be determined by what customers think of our products and our model. Right now, we're having trouble thinking 5 months out with what's going on. We're not really turning our mind to 5 years, but There is a genuine want and desire from the team to expand that model outside of our borders.
Thanks, guys. That's it for me. Cheers. Thanks, Tim.
Thank you. We have one more question from Sanjay Patel from Cap Fund. Please go ahead, Sanjay.
Good morning, gentlemen. Look, just got 3. First one being, how are you seeing your competitive landscape, Especially with COVID for the last year and a half, are you seeing that the smaller players have dropped off and that's giving you an opportunity to sort of pick up Opportunity. And on the alternative, are you seeing other new players coming in Yes, looking to get into this space at your end. Yes.
Look, I think the competitive landscape is fairly much As it ever was, I certainly think that in this period and as we get deeper and deeper into this, the bigger guys with strong balance sheets I don't have the opportunity to take market share. I think the fact that we were able To acquire good through that period, a pretty compelling price. It's good. Our major competitors are still our major Competitors are all strong. We all have our own unique value propositions.
And I think we continue to get our share in the market. This is probably the best way to answer that. Daniel, do you want to add some color? Yes. Look, and that's pretty much answered.
I think that what we are finding is particularly at the moment, and We feel this will continue for many years to come is that our country stores in particular, now we're opening country stores Or C grade centers, which we never would have entertained 3 or 4 years ago, have suddenly become very, very strong. And by that, I mean that particularly in our Platypus model and athlete's foot, we've opened in places like Rockhampton, Ipswich, Echuca, Sheppard and Wagga, those type of places. And the sales have been well above any Expectation we had. And we've seen lots of runway in that space as well. And that's not necessarily just coming from Owner operators of 1 and 2 store operations falling off.
It's really coming because we're providing A much fuller experience of product in those markets where they may not have had prior to what we've done of late. On top of that, where we do open those sorts of stores, our digital sales are growing in those areas. And that's the most pleasing For us, we're happy to grow the overall share. Fantastic. Thank you.
Just my next question. With some very tight labor market and seemingly tighter labor market that's coming through, are you seeing difficulties in Getting the staff for your growth ambitions. And are you seeing cost pressures starting to come through with existing staff? Well, cost pressures have been there forever. I've been doing this for 35 years, and there's always cost pressures on that line, that's for sure.
I've never met anyone at Accentany or us, and I'd be happy to accept less. But we It could be our sector. We are like everyone else, yes, we had some trouble. But by and large, We've got when we advertise the positions, we certainly get a very big turnout for The age group we operate within. But on top of that, I'd like to point out that our culture is quite strong in terms of operating within this youth type area, and that's allowing us to attract very, very strong applicants At all levels, to be honest.
Okay. And probably just my last one. With the focus on cyber at the moment, what is your cyber strategy? And have you had any instances of hacking or any problems With that in the recent past. Yes, that's a good question.
We've got a very, very strong focus on Xyle. Indeed, we We've got a head of cybersecurity, which did a new role to our business about 6 months ago. And he's a very, very senior experienced guy. He was making Sure that we're protected. We conduct external Engaged external hacking consultants to try and penetrate our system, the penetration testing, all of those sorts of things.
I'm not going to say it will never happen because I think it's very, very difficult in this environment. We feel that we're doing everything we can to avoid it. We haven't had any major incidents to date. And Yes. We've got our fingers crossed that we won't, but you can never say never in this environment, unfortunately.
Okay. Thanks very much and congratulations on the results. Thank you. Thank you.
Thank you. We've got one more question from Peter Richardson, who's a private investor. Please go ahead, Peter.
Good morning, Daniel and Matt. You included a slide on the gross margin and FX rate side, obviously, is Something you say is important. I guess it shows that you've achieved sustained pretty good gross margins whilst you got a lower Australian Dollar. And just suggesting that your rate is $0.74 for the following year hedging forward hedge debt or is that just the forecast? No, that's our forward hedging position that we're indicating there.
So we previously called out a hedging policy to hedge about 50 Said of our forward commitment over 18 months. And that $0.74 rate is indicating What those hedges are, applies to that. Okay. Thank you. Thank you.
Thank you. There are no more questions at this time, so we will conclude the question and answer session. Back over to you, Matt. Fantastic.
Well, thank you, everyone, for joining this morning. Great questions. Really appreciate all your support, and we'll talk soon. Thank you very much. Thanks, guys.
That now concludes the Accent Group FY 'twenty one full year results investor call. Thank you for attending, and enjoy the rest of your day.