Accent Group Faces Margin Squeeze and MySale Closure as Retail Conditions Tighten
Accent Group reports modest sales growth but margin pressures in FY26 H1, announces MySale closure and new Sports Direct store launch.
- Total group owned sales up 3.7% in first 20 weeks of FY26
- Like-for-like retail sales down 0.4%, gross margin 160 basis points lower
- H1 EBIT guidance revised to $55M-$60M including MySale losses
- MySale operations to be discontinued and wound down early Q3 FY26
- Sports Direct brand launches first Australian store with plans for rapid expansion
Sales Growth Meets Margin Headwinds
Accent Group Limited has reported a mixed start to FY26, with total group owned sales rising 3.7% over the first 20 weeks. However, like-for-like retail sales, a key indicator of underlying store performance, slipped slightly by 0.4%, reflecting ongoing challenges in the retail environment. October showed a modest rebound with a 0.4% increase in like-for-like sales, suggesting some resilience amid a competitive market.
Gross margins have come under pressure, falling 160 basis points below last year’s levels. The company attributes this to an elevated promotional environment, which has been necessary to maintain sales momentum but has squeezed profitability.
Profit Outlook and Strategic Adjustments
Reflecting these dynamics, Accent Group has provided updated earnings guidance for the first half of FY26, expecting EBIT between $55 million and $60 million. This range factors in non-recurring losses from the decision to discontinue the MySale business, which has recorded $3.48 million in EBIT losses to date. The full-year EBIT forecast stands at $85 million to $95 million, with the second half expected to deliver between $30 million and $35 million, roughly in line with the prior year.
The closure of MySale, acquired earlier this year through a strategic transaction with Frasers Group plc, marks a notable shift. The company will wind down these operations early in the third quarter, signaling a focus on core brands and more profitable channels.
Brand Partnerships and Growth Initiatives
On the distribution front, Accent Group has extended key agreements, including Skechers through 2035 and HOKA by five years to 2030, underscoring confidence in these growth drivers. Conversely, the non-material Dickies distribution agreement will be discontinued following a change in ownership.
Highlighting its expansion ambitions, Accent Group opened the first Sports Direct store in Australia at Fountain Gate, Victoria, on 15 November 2025, alongside launching the Sports Direct online store. This marks a significant milestone in the brand’s rollout across Australia and New Zealand, with plans for three additional stores this financial year and a target of at least 50 stores over the next six years.
Cost of doing business and inventory levels remain well managed and aligned with company plans, providing a stable platform as Accent navigates a challenging retail landscape.
Bottom Line?
Accent Group’s strategic refocus and new brand launches set the stage for a pivotal FY26 second half.
Questions in the middle?
- How will Accent Group manage margin pressures amid ongoing promotional demands?
- What are the long-term implications of discontinuing MySale on overall profitability?
- Can the Sports Direct expansion deliver the growth needed to offset lifestyle footwear softness?