Accent Group (ASX:AX1) shares plunged 13% in Australia on Monday after the footwear retailer issued a profit warning and disclosed signs of weakening trading conditions.
The company revised its guidance for second-half fiscal 2026 EBIT to a range of A$23 million to A$28 million. That midpoint is 22% lower than the prior guidance midpoint. The updated forecast factors in roughly A$2 million of restructuring costs tied to a new cost-reduction program planned to run from April through June.
The revised EBIT range sits about 20% beneath the current consensus estimate of A$31.8 million.
On sales, Accent Group reported that like-for-like sales in the second half through May 3 were down 1%, versus consensus expectations for 0.7% growth. Management said trading was flat across the first eight weeks of the period but highlighted a significant slowdown in April, with an estimated decline of 3.6% for that month.
Gross margin for the continuing business was reported at 54.2% through April 26, a decrease of 80 basis points compared with the prior corresponding period. This represents a departure from earlier guidance, which had anticipated gross margins to be flat year over year for the second half.
Goldman Sachs analysts commented: "We expect AX1 to underperform today on 1) the lowering of 2H26 EBIT guidance from A$30-35m to A$23-28m, implying 22% at midpoint of guidance (-15% excluding A$2m restructure costs) 2) mgmt flagging deteriorating April trading conditions."
Accent Group said its current guidance assumes the recent trading conditions it has experienced will continue through the remainder of the second half. The company is developing a cost-reduction program that it expects will produce meaningful savings in fiscal 2027. Details of that program will be provided at an upcoming Investor Strategy Day.
Investors reacted to the combination of lowered profit expectations, the disclosure of restructuring costs and the reported April slowdown, sending the stock lower on the day.
Context and next steps
The company has signaled that further information on the planned cost-reduction measures will be shared at its Investor Strategy Day, which management has cited as the forum to outline expected savings for fiscal 2027. Until then, the updated guidance assumes the recent weaker trading pattern persists.