Australia’s sneaker addiction helped footwear retailer Accent Group defy the general retail malaise and deliver a 22.5 per cent increase in net profit to $53.9 million in 2019.

Accent, formerly known as RCG, owns 480 shoe shops under the Hype, Platypus and Athlete’s Foot banners and sells brands such as Vans, Nike, Dr Martens and Skechers.

While industry-wide clothing and footwear sales have been subdued, Accent grew sales 13.4 per cent to $796.3 million in the 12 months ending June.

Online sales almost doubled, rising 93 per cent to almost 15 per cent of total sales, as the retailer launched new sites, same-day delivery, click and collect and endless aisle, which enables customers to order products not sold in their local store.

Same-store sales rose 2.3 per cent over the year and by 3.5 per cent in the June half. They rose 2.7 per cent in the first seven weeks of 2020.

Accent opened 54 stores, closed 21 and refurbished 32, taking company owned stores to 480. It also bought back 30 franchised Athlete Foot stores, acquired street wear retailer Subtype from Zanerobe and launched a new retail concept, childrens footwear chain The Trybe.

Chief executive Daniel Agostinelli forecast further earnings growth in 2020, underpinned by low single digit same-store sales growth and new stores and products.

He said there had been no pick-up in sales momentum following recent tax cuts.

“New products and new fitouts work a whole lot better than tax refunds,” he said.

Accent plans to open at least 40 stores and launch another new retail concept, PIVOT, similar to Dick’s Sporting Goods in the US, selling budget-priced branded sports and street wear. Shoes, for example, will cost $90 to $100 rather than $150 to $200.

“We know how big this market is and there doesn’t seem to be a chain in Australia that houses all these value products under one roof,” said Mr Agostinelli, adding that the new chain would compete with Super Retail Group’s Rebel stores.

Gross margins are expected to remain steady in 2020 after rising 130 points to 56.1 per cent in 2019 and by 200 points in 2018 as the retailer cut back on discounting and sold more products at full price.

Accent also plans to expand its new range of ‘vertical’ products, such as socks, bags, hats, shoelaces and shoe cleaners, which were launched last November and generated sales of $4.5 million in 2019 on gross margins of 70 per cent. Sales of vertical products are expected to reach $15 million this year.

However, the retailer appears to have shelved plans to expand overseas, at least for now.

Last year Accent was planning to take its Platypus shoe store format to new markets overseas, starting in Singapore, with the help of Accent’s largest shareholder, retail chameleon Brett Blundy, the founder of Brazin and BB Retail Capital.

Mr Agostinelli said the company had failed to find any international opportunities that met its investment criteria.

“Whilst we continue to review opportunities internationally, domestic expansion opportunities have been identified that are more attractive than the international opportunities reviewed to date,” he said.

Citigroup analyst Sam Teeger said this made Accent’s story less exciting but allowed the company to better leverage its existing infrastructure and support functions.

“Accent continues to demonstrate it is one of the most innovative and driven listed retailers given its ongoing pursuit of delivering growth to shareholders,” Mr Teeger said.

“The market should like the lower risk Australian rollout focus compared to the international expansion which the company has flirted with.”

This article was first published by The Australian Financial Review. Read the original here.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.