Accent Group Limited ($AX1)

Welcome all. Welcome to Accent Group Investor Day for 2026. I'm Daniel Agostinelli, the Accent Group CEO. I'm joined today by Matt Durbin, our Finance Director. Today, we're excited to outline our 2030 growth strategy and share some of the exciting things we have ahead of us.

Thanks, Daniel. To kick off, we wanted to introduce our new vision and strategic pillars to drive growth to 2030. We have an action-packed agenda and aim to leave you with confidence in the future for Accent. Daniel, what are your thoughts on where Accent is today and our plans for the future?

Thanks, Matt. I see our business as the region's leading destination for performance and lifestyle. We have scale in the market and access to 10 million customers through our 900 store footprint, including our websites, a large integrated and growing digital business, exclusive distribution agreements where we are the brand custodians in Australia and New Zealand for a number of the world's best performance and lifestyle brands. And our multi-brand retail businesses and vertically owned businesses make us a key partner for brands in the market. On the screen, we demonstrate an ambition of $1.9 billion by 2030. Personally, I'd like it to be more, but that's $1.9 billion. I have a personal long-term held ambition to grow the Accent business to $2 billion in sales. And whilst there have been some margin challenges in recent years, I feel we have a clear plan for margin rebuild in the short term and medium term.

The focus of this morning's session is to speak to our core capabilities, what differentiates us and what helps support a leading position in the performance and lifestyle market. As shown on the right-hand side, we'll also cover our 2030 ambition in path to a bigger or profitable Accent. Our customers and brands are core to everything we do. We currently have more than 25 brands in our portfolio. Our distributed brands have global scale. And in ANZ, we're the brand custodian for these brands, driving end-to-end execution, including supply chain from factory of origin, end-to-end marketing in the Australian and New Zealand market, distribution to wholesale customers, direct-to-customer through digital and our brand concept stores and outlets and through our multi-brand stores, where we enable instant scale and reach to these brands. We believe this integrated model creates a number of benefits for Accent with diversification of revenue and attractive margins. Almost 50% of group sales are achieved from our distributed brands. Over the last 6 years, we have driven a strategy to grow our own vertical brands. It started with accessories and then evolved into apparel. This currently -- these vertical brands currently contribute 9% of sales and will continue to grow as we incubate and test new brands and products to capture market opportunities. Daniel, what's the Accent advantage? And why is it important?

We have a range of capabilities and strengths that combine to deliver sustainable growth and performance. We are the trusted custodians of distinctive brands that we have retained and built over nearly 40 years. We've actually never lost the brand that we distribute. We have a proven and repeatable ability to scale brands. We have done this across brand types such as distributor brands and multi-brand retailers like Platypus and The Athlete's Foot and our incubated vertical owned brands. Our scale and reach are significant with 10 million customers and online orders of approximately 3 million a year. And finally, we have a resilient portfolio models driven by attractive gross margins, vertical products, replacement-based products like sportswear and strong retail execution.

Accent Group has significant scale across footwear and apparel in ANZ with stores located in every major shopping center. We hold a clear market-leading position in footwear as the largest network in the region. We estimate more than 70% of the Australian population have access to an Accent physical store. Over the last 3 years, we've served more than 10 million own customers including 5 million in the 12 months -- last 12 months. This is also supported by a scalable logistics capability. Our physical footprint means we have strong and material relationships with all the large retail landlords and many other landlords around the country and a deep understanding of our local area customer, how they shop and where they shop and when they shop. Combined with our digital presence across 31 websites and our strong distribution network creates a very effective integrated omnichannel business. Daniel, how do you think about brands and their importance to Accent?

A core element of Accent's success is that we are the trusted brand custodian in this part of the world. We are the distributor for 9 of the largest footwear brands and a key retail partner for many others. To win in performance and lifestyle requires partnering with access to large global brands. We do so by making ourselves an indispensable partner for the global brands in our region. Accent has built a long-standing partnership spanning up to 38 years with a proven track record with brands such as Skechers, Vans and Dr. Martens. These relationships also extend to key parent companies, including VF Corporation and Decker's Group. In addition, as Sports Direct continues to scale, we expect to further strengthen these partnerships and drive growth across both distributed and third-party sports brands. This will also be supported by leveraging Frasers Group's global relationships with leading international brands such as Nike, Adidas and others.

We have a demonstrated ability to grow brands in our region. For our distributed brands like Merrell, Dr. Martens, Skechers, Vans and Timberland, we've delivered strong growth over the past decade, supported by our multi-brand retail network. On the screen on the left, you can see the compound annual growth that we've delivered in those brands over the last 10 years or so. More recently, the performance in Hoka highlights our ability to scale new brands rapidly in the ANZ market. Over the period that we've been the distributor, we've been able to triple brand awareness and double sales over the current distribution partnership. What's very exciting about Hoka from where it is today is that brand awareness in ANZ currently sits at around 38% compared with other global sports brands that typically exceed 90%. This highlights a substantial runway for future growth in Hoka as awareness and market penetration continue to increase. In our vertical brands, we continue to scale Nude Lucy, Stylerunner and ODE. And Nude Lucy has delivered around $70 million of sales and more than $10 million in fully costed EBIT in the last 12 months from a standing start just over 3 years ago. We'll continue to build these brands through category expansion, scaling e-commerce and early stages of international expansions as in Nude Lucy, in particular, in wholesale channels. We've shipped at least to 150 specialty stores in the U.S. already.

Over the last 5 years or so, we have built capability in vertical apparel, and accessories continues to grow for us. So there's been a big, big learning curve for us given we started with simply stocks in this market and making our own instead of selling third-party socks. I'm just delighted what the team has built. You will meet some of those teams across the road after this session. And from our point of view, we are simply just getting smarter, better. Better factories, better people joining us, and the learnings are just moving as quickly as I've seen anything else move across the group. So we're very pleased where this vertical capability is going, and hopefully, we can improve on that moving forward. We haven't necessarily got everything right. We've experimented. We started and exited many brands over the last 6 years. However, with these learnings under our belt, we believe the success achieved with Nude Lucy is replicable, particularly with our next candidate, which is named ODE and we will show you some of that capability in the next session.

Moving to the current state of play.

We operate in a large growing market -- sorry, we operate in a large and growing market segment and today have strong market share positions in the lifestyle and sports footwear markets. This reflects Accent's heritage. Moving forward, we have a significant opportunity for further growth in sports footwear and expansion in adjacent categories for apparel. Matt, what are your thoughts about the market?

Based on what we're seeing in market and industry reports, the Sports segment is expected to continue to grow strongly in the current years. Our core goal is to grow in the sports, footwear and apparel markets. And this has been the ongoing rationale for our investment in The Athlete's Foot and the partnership with Frasers to build Sports Direct. It's evident that Accent currently has a small share of the lifestyle apparel market. The addition of Lacoste, together with the continued expansion of vertical brands, Nude Lucy, ODE and Stylerunner strengthens Accent's position and represents another key growth market. Accent has consistently delivered strong sales growth throughout its history, achieving more than $1.5 billion in total sales over the last 12 months. We've outperformed the broader market in each of the last 10 years based on ABS data. Even in more recent times, revenue growth, and I'm talking about '23 to '26, which has no doubt been more challenging, has continued to exceed our growth in store numbers and the broader segment growth, again, based on ABS data. This performance is aided by our flexible business model and strong brand partnerships, which provide early visibility into emerging consumer trends. This allows us to move quickly to commercialize winning products them across our more than 900 store network. The capability to rapidly introduce and scale new brands has enabled Nude Lucy and Hoka to achieve meaningful scale in a relatively short period of time, and we see similar potential with Lacoste and even more with Sports Direct. Daniel, we've talked a lot about the good stuff. However, it's worth noting some of the recent challenges we've faced.

Yes, it's more than clear that lifestyle footwear is under pressure globally, and I really mean lifestyle. You only have to have a look at Nike. You saw a $5 billion drop in revenue in 2025 compared to 2024. The lifestyle footwear industry is facing challenges in product innovation and for at least 18 months has lacked heat in the pipeline. Adidas, for example, has performed well with the Samba in the last few years. The Samba, for those of you that don't know, is a very strong shoe that we had in the market. But since then, they haven't got anything new in the market of significance. And even Nike has had limited product innovation. To illustrate the impact of numbers, over the last 18 months, we sold approximately 140,000 fewer pairs of Samba, representing around $25 million loss in revenue than the prior corresponding period. I have a picture of a physical shoe that I'll show you soon about what the Samba actually is. But that's a significant drop on one particular style in the lifestyle space. More broadly, softer like-for-like sales across the Lifestyle segment, combined with elevated promotional activity and inflationary cost pressures has impacted profitability.

We have to acknowledge the challenges aren't just market based. We've had some internal challenges as well.

Yes, firstly, we had to close our loss-making businesses with Glue and Ozsale. While Glue ultimately did not succeed, it played an important role in the development of Nude Lucy. This is where Nude Lucy was born within those stores. As we have called out for a while, the Vans brand has shrunk significantly over the past 3 years. It is only now that we have been able to fully action store closures and wholesale volumes to reset Vans in the market for the next 3 years. It is worth calling out we have been operating for nearly 40 years and have successfully navigated multiple retail cycles, including periods of challenges, i.e., COVID. And through that, we have consistently emerged stronger through those cycles. We believe we have the scale, capabilities and market position to continue capturing growth opportunities where they exist and ride the waves. And speaking of waves, I wanted to share something with you that just dropped only 10 days ago about Vans. [Presentation]

This is the actual shoe guys. It was launched. I don't know, just looks like another Vans shoe, but this is the market we operate within. It launched at $120 retail. It's now selling for $1,600 this morning. That means brand heat is coming. That's how things start in our world of lifestyle. We are seeing early signs of sneaker hype coming back. As shown, Vans is gaining traction through limited release sneaker drops in New York City, and that also extends to other brands such as Nike. Whilst Nike are not my best, I guess, third-party partner, purely because of margins, they offer less margins, they are the smartest in the business. They are the biggest by a long way very convinced that they're going to come back strong. It's just a timing thing. We see innovation emerging with brands, introducing new products to market, Hoka, Dr. Martens and Vans as well. Vans also continue to leverage iconic models making a comeback, and we are well positioned to capitalize on this. And as an example, we sold roughly 13 million pairs of shoes last year.

While we face some macro headwinds this financial year, we are more than happy with our growth in sports and in vertical owned brands. Sports is an attractive and high-growth market. The TAF model performs well in this segment, and we are confident that this growth will only accelerate with the rollout of sports direct stores. Likewise, our omnichannel presence continues to grow. And digital is now over $300 million of sales and more than 20% of total group sales. Our network of stores also provides easy access to click and collect, which has grown at 19% per annum over the last few years, and we'll continue that momentum. And on the screen there, you can see some of the -- I'm not going to call them segment results, but the differential results that we've achieved in sales, and it gives you some idea into the profitability when you look at the lifestyle and footwear banners, having only grown at total sales of 1% over the last 3 years. We're not pleased with that, but in a high inflationary environment that's created margin jaws, and we now need to work hard to reverse that trend. Daniel, what's the 2030 strategy to deliver earnings uplift and growth?

Our strategy is focused around 3 pillars: efficiency, evolution and expansion. First, efficiency. We know we need to capture cost reduction opportunities across the business, rationalizing the brand portfolio by closing underperforming brands in stores and fighting hard on lease renewals. We are well underway on this. In the room, we have Dave Coombes, who controls our property department, and I think he's the best in the business, having fantastic success. Second, evolution, includes strengthening our core brands and retail banners to better capture market opportunity. This includes TAF, franchise buybacks, category expansion, and store refits in Platypus and growing the presence of distributed brands like Skechers and Vans. And third, we will drive expansion. We will never sit still and continue to look for new opportunities to grow. Firstly, we are excited by the growth of the potential of Sports Direct, and we will continue to identify and grow Accent vertical owned brands such as Nude Lucy and ODE and actively pursue further brand distribution opportunities aligned to our portfolio where we can supply the market and indeed all the banners that we have in the different segmentations.

Moving on to cost efficiency and our first efficiency pillar. We continue to rigorously ensure that our business is running efficiently. This is nothing new, and we have been on this journey now for 4 years and even more before that. However, we're announcing today $30 million of total cost efficiencies that have been identified and targeted for FY '27 and an additional $10 million targeted for FY '28. So we talk about the '27 efficiencies as identified and in progress being implemented. So this isn't a target. This is actually what we've identified and what we're going to go after in the next 12 months. And that full benefit, that full gross benefit will land in FY '27. After inflationary impacts, the net impact of those 2 amounts will be $15 million to $20 million over the next 2 years with targeted cost of doing business percentage to reduce by 90 to 150 basis points. The cost savings come from 3 areas: savings and reductions in the size of our support office team including the offshoring of roles and the use of AI to reduce manual processes and no doubt that will come up in Q&A, and we can elaborate more. Improving team rostering in stores, identifying stores that have higher labor rates than other stores and lower productivity and increasing the productivity of those stores. And that's something that has been ongoing for a while, but we've actually ramped that up in recent times. It's been a massive focus of the team over the last 6 months to reset rosters. And that's all now in place. We started getting benefits from it in the back end of this financial year, and we'll get a full year of benefit into next year. And finally, areas like occupancy, which we'll talk plenty more about, I'm sure, where we're going very hard on lease renewals. And we've talked for a long time about improving the efficiency of our marketing, in particular, digital performance marketing, where we're using our own customer-owned channels, and our access to 10 million customers so that we have to spend less money with Google and the other big performance marketing brands of the world. Cost efficiency targets only cover our '27 and '28 plan, and we'll continue to find and deliver improvements from '29 and beyond, particularly as we implement AI-based systems and solutions, we expect further opportunities in costs to emerge. In addition, as Daniel called out, we're always looking to strengthen our brand portfolio. At times, this requires rationalizing underperforming brands to ensure capital is deployed effectively into our strong propositions. This includes exiting Ozsale, Superga, the Herschel distribution agreement and closing Glue stores by the end of June 2026. And you get a sense that, that's 4 underperforming parts of our business that will be wrapped up and have left by the end of June. This rationalization will deliver a $16 million EBIT uplift in '27 over '26. So that $16 million is effectively the P&L losses that we've experienced in those brands that we leave behind at the end of this year. We go through a similar process with our store network. There are more than 100 stores today that, due to 5 years of inflationary pressures on rents, may need to close at renewal. This is in addition to the 39 stores that closed or in the progress of closing across '25 and '26. These stores have been under pressure from lease rates and we expect to make a decision as these stores come up for renewal. We are targeting a minimum uplift of $7 million over the next 3 years, 3 to 4 years through lease negotiations, performance uplift in those stores or closures. And as a team at Accent, we've turned our mind to if a store has to close because we can't get the right lease outcome, how do we capture that customer spend in digital and in our other banners in the center and in the catchment. And that's starting to become a major program for us. And if we can shift 20% of our full wall sales from a closed store to an existing store, the profit turn on that is quite profound. And we have a strategy to do that, and we'll let everyone know how we're going along the way. I think that's the end of that slide. Sorry. I'll go back. Sorry, guys. The closures release capital, which can be reallocated to higher return areas of the business. We also aim to open 20 stores across our growth brands per year in addition to the planned rollout for Sports Direct, which we'll touch on shortly.

The Athlete's Foot continues to demonstrate strong structural growth, consistently delivering stable and growing comparable sales year-on-year. This reflects the strength of the proposition and the strong customer connection with the brand. I'm quite amazed that this business has now had a 5- to 6-year comp stack and continues to just grow. And we also have Ian in the room today who runs that business and is doing a stellar job with him and his team. TAF offers a premium service experience reflected in a Net Promoter Score of positive 86. For those that are aware of a Net Promoter Score, that is incredibly compelling. We have also benefited from a favorable category tailwinds as consumers can increasingly trade up into more technical performance footwear, including the growing demand for carbon-plated running and super shoe categories. Looking ahead, we have 30 franchise stores remaining to be reacquired between '27 and FY '30. We will -- which we expect will contribute approximately $14 million in EBIT uplift by 2030. The annual acquisition plan has been outlined in the appendix. Looking at future opportunities. Sports Direct represents a unique proposition in the sports market. It allows us to leverage global brands, access exclusive products and strengthen our supplier relationships. The platform also allows us to enable us to expand presence in the sports and apparel categories while offering synergistic benefits through selling distributed brands in our stores.

While still early, we've seen strong sales performance across our digital, Fountain Gate and Chatswood Chase stores. And for those of you who are joining us this afternoon, you'll get to have a good unpack of the Fountain Gate store. At launch in November, the business was generating annual sales of approximately $7 million. We had 1 store on a website, which has since increased to around $15 million annualized sales across the 2 stores and online channel. Based on both our experience with The Athlete's Foot and Frasers Group experience with Sports Direct internationally, we expect an 18 to 24 ramp-up -- 18- to 24-month ramp-up to maturity. And in fact, last week was Sports Direct's best week ever in the Accent Group. So we're already seeing, as weeks go by, that business is strengthening as the customer gets to know it and wants to visit us more. And you'll meet Steve and his team today who are flat strap driving that business for us amongst other things. There's a plan to open by the end of 2026, with approximately 30 stores targeted within the next 3 years to further build brand presence across Australia. Over the longer term, our ambition is to scale Sports Direct to between 50 and 100 stores, replicating the successful multi-brand retail network strategy we've executed across other banners.

With our vertical brands, we look for opportunities to build and even acquire brands that are distinctive in the market and support customer trends. Platforms like Stylerunner allow us to test new concepts or third-party brands before scaling them across the network. Sports Direct further enhances this capability, particularly in men's sport and apparel. This will enable us to grow our sales share of vertical brands, which offer the most attractive margins for the business. We now have a replicable model to grow our new vertical brands.

Daniel, when it comes to us choosing who will distribute in this market, what do we look for?

We remain selective, focusing on brands with strong growth potential, market fit and attractive metrics. We are always in discussions with brands across footwear and apparel and are in the negotiations as we speak with a number of global brands currently. We have the capability to build both vertical brands and partner with new global brands in low-risk environment through testing and developing products in our large store network, and we are constantly looking for new opportunities that offer strong and attractive returns. In terms of the brands, and you'll see across the road when you enter the building across the road today, we have set it up so that when a brand comes to this market, we are the obvious choice to partner up with in order to get their distribution going. And we have Liam, sitting in the room who heads up that division doing a marvelous job with many of these negotiations we have going on.

Looking forward to FY '30, we're focused on driving meaningful earnings growth through these initiatives with a forecast baseline objective of $1.9 billion-plus in sales and a 9% plus EBIT margin. In FY '27, we have brand rationalization, cost efficiency, TAF buybacks and significant currency tailwinds to margin, and I'm sure we'll talk more about it in Q&A. Everyone loves to talk about the currency. Beyond '27, we expect further cost efficiencies, as we close out the TAF reacquisition program and significant sales-led growth across Sports Direct and new distributed brands, vertical apparel and an evolution of our core lifestyle brands. Whilst macro conditions remain volatile, our business model enables us to navigate these conditions confidently. However, there are factors out of our control, including interest rates and FX rates. We have and will continue to factor these into our ambition. But in conclusion, we're confident that there's a clear path to grow it. In terms of capital allocation, the group has paid out just over $500 million in dividends in the last 10 years and remains a highly cash-generative retail model. In terms of major investments, the TAF franchisee acquisitions have been in a return on investment of around 20%, and we are targeting in excess of 20% for the Sports Direct rollout. Most importantly, the business has sufficient capital and projected future cash flows to fund the growth strategy to 2030. And we always maintain the cash not required for future investments will be used to pay down debt or return to investors over time. Coming on to why invest now. And before we move on to questions, we're going to pause on this slide, and Daniel is going to come up with a closing statement, and then we're going to have some Q&A, and we're about 7 minutes ahead of schedule. So that's more time for questions.

Which is good.

Over to you, Daniel.

I'm going to stand that because I woke up this morning thinking what's the so what in all this deck, I've read it 15 times. Look, from my point of view, there's a lot in this deck to digest, and I'm sure you'll have time to go through it when time permits for you. But my version of a summary. The focus is for the team and I is top line sales growth. We sold 14 million to 15 million pairs of shoes last year. If we can get our customers to buy one more pair per store per day, that is game changing, there's major upside. We're looking for 1% gross margin growth. Thankfully, ForEx is going our way. Finding the efficiency across the business using technology and AI allowing us to find cost savings, a lot of that is happening as we speak. The closing of nonperforming stores and transitioning to new performing banner. We've done this with 4 or 5 stores with great results. Looking for new brands that can be sold to our wholesale customers and especially across most of our banners in different segmentations will help that drop and desire to grow the margin. Executing on the Sports Direct rollout. We have a great partner who has done this before in many markets. They are supportive, especially with product and know-how about how to expand the business. And so far, as Matt mentioned, we've opened some Sports Direct stores and last week being our best week ever, the average customer doesn't even know who we are yet. That will grow as we start to scale and start to increase marketing spend and so on. We still must be innovative and ensure that how we show up in markets is on point, rear fit-outs, our websites, our product, our new banners, i.e., ODE that you'll see across the road. The 1% is, as I call them, of how we show up in the field, merchandising, ambience, and we've got a great team that drives that day in, day out. Very, very important point, which sometimes gets lost in all of these presos and where we're going. But customer satisfaction across all banners. That is just the key. It's been key for us for many, many years, and we will continue to ensure that our customers are satisfied. Product, product, product. We must remain on trend. That's what our business does. We're a discretionary buy. Trend matters just so strongly. And we have to continue to strengthen our culture of can do with our team and ensure that we've got tangible evidence that the culture lives. And by that, I mean, little things. If someone's having a party and they need that shoe today and for whatever reason we can't get it there on time, then getting the courier driver there, put in a new but do whatever it takes. Customer satisfaction comes first. I believe that what you've seen so far in our strategy is disciplined and designed for earnings growth and hopefully leads to stronger shareholder value. We have a foundation. Our plan is already in motion, and we now must execute. We simply hope you join us on our journey, and I thank you all again for attending today.

So guys, we're going to open up to questions now. We've got, in addition to the 50 people in the room, about 100 people actually on the line. So this is broadcasting live. We're not going to take questions from the line. However, we are going to take questions from the room. We have about 20 minutes of questions. So if you'd like to ask a question, there's some mics sort of people on the line can hear them. So we'll, yes, hopefully, we'll have time for everyone to ask their question.

Matt and Dan, Shaun Customs from UBS. Maybe just sort of two questions. Maybe just the broader margin expansion ambitions that you have, does that require an improvement in the lifestyle footwear category where you have high market share, and that's been quite a challenge? Or can you achieve that margin expansion if the lifestyle market remains subdued as it currently is?

Great question. It's one we grapple with every day. This is the shoe I was talking about before. We are 147,000 pairs less than the corresponding 12 months. That's how quick trends change. So we're looking for innovation. This is the innovation we're getting from Nike. Most of your kids bought these 8 years ago. There hasn't been any change. But here's what's going on. Hopefully, some of you guys have got this shoe. We're a product business here. This sole is what it's about. This is the On shoe. We don't distribute this brand, but we are -- if not the biggest, one of the biggest sellers of this brand is third party and it's growing big time. So again, innovation. And that's happening in the lifestyle space, Shaun, as well. This -- some of you guys might recognize this. We've distributed this for 15 years. It's back on trend. I can't believe it, but it is. And women are wanting this in small sizes. So that's how quick trends move. And my favorite, this is Hoka, this brand we do distribute. We're having a jolly old time here across the business. It's now either #1 or #2 in The Athlete's Foot business week-on-week depending on where it goes and really super strong in Sports Direct so far. And as I called out earlier, it's all about the plate in here, and we'll take you through some product later, but this is all innovation, and it's starting to cross into the lifestyle space. So yes, Shaun, is lifestyle going to completely fall over? I don't think so. Worldwide, there has been a lack of innovation, lots of customers have moved to this cross-section of sports and lifestyle, and it's now showing back up in the lifestyle space for us, and this great product coming our way.

Great. And my second question is just around performance footwear. I think Rebel called out in their update last week or the week before around some sluggishness in performance footwear that that's become a little softer. Just curious if you're seeing that any sort of indications to the consumer not participating as much in that $250 to $300 to $400 price point or if they're trading down from maybe premium malls to sort of discount locations? Just curious if you're seeing any sort of sluggishness in performance footwear in recent months.

No. Not from our point of view, it's still strong. As I mentioned, The Athlete's Foot is strong. That's a pretty good sample with 150-odd doors out there, including the franchisees. What is happening is that the good product is becoming more expensive, and the customer is accepting that price when technology is in the actual shoe. But if you have a look at what occurred in Sydney the other day, just a little fun run of 30,000 people turned up. I mean it's incredible. And you can go to any one of your, wherever you may live, there'll be people running, catching up as run clubs. It's just getting stronger and stronger. So I think sport is in for a good time.

Sam Teeger from Citi. Just keen to understand the assumptions around marketing to sales ratios on the 30 to the 9% EBIT margins. We understand you need to spend more marketing on Sports Direct, but is that incremental or are you going to be pulling marketing from other banners to fund Sports Direct?

Sam, that's a good question. So the answer is the marketing will be incremental for Sports Direct and I don't expect that overall, our marketing percentage of sales will drop. And in fact, in the early part of the plan, as we're growing the Sports Direct business, we've got some hefty marketing commitments built into that plan, which we think will be required to drive that as a new business. Where we are going to save money in marketing is continuing to drive efficiency in the digital marketing spend, and we still spend many, many millions of dollars in that performance marketing area. So we will continue to drive efficiencies there. But as we invest in Sports Direct, particularly in the early part of the plan, where we're investing ahead of the curve, you may even see marketing percentage to sales go up a little bit. So the dollars we'll try and maintain. The percentages will go up a bit. And it's a -- I'm going to say, a small part of what we need to do to achieve the 9%, but you don't win by cutting marketing.

Sean from CLSA. Well, first of all, first, the presentation I'd love to come up and have a touch about that pair of Vans shoes, understanding why it's worth $1,600. So Matt, the question for me, $40 million gross saving converting to only $15 million to $20 million net savings. So my understanding is a bit of inflation, deleverage of so more than half of these things to the program. Can you help us understand what's the wage inflation in lease, rent inflation you've been put into the net build, especially given the Fair Work Commission based on the announcement?

Yes. Great question. And we put some sort of indicators on the slide of where we're thinking for those areas. So -- and this gets a little bit of a question that Shaun was asking as well about margin expansion. So if you think about gross margin and then it'll come back to costs, we do expect to have strong currency tailwinds in the next 12 months. Everyone can see that the dollar is currently sitting $0.72, $0.725, and we've been buying into that and hedging more strongly through that period. And we now have a fair bit of our position locked in for the FY '27 year, which about 60% when we updated the market in February has been where we were heading. And now that's over $0.70. It's a bit higher than that. Coming on to cost of doing business, you saw on the slide that in respect of the '27 year, we put out an assumption of 0% to 2% LFL sales growth it's part of the key assumption in how much of that $30 million we get to keep. So the answer there in terms of do we need to see our strong recovery in lifestyle in respect of FY '27 to improve the margin? The answer is probably not. So the first step there is that we've planned for, I'm going to say, low comp growth in that period. And that could be as little as 0% comp growth in that period to retain the $10 million to $15 million net of that $30 million gross saving. That's why that $30 million has to be so big. In terms of the wage assumptions, we have had wage increases over the last 3 to 4 years of between 3% and up to 5% including the shift in the super guarantee over that period, which is now done. And everyone is aware that the junior pay rates have changed. So we've factored in a component for that. And I don't know what the wage increase is going to be, but you would have to expect with inflation where it is, it's likely to be on the higher side, call that 4-plus percent, then on the lower side being 2% to 3%. So you can imagine that we've erred on the higher side as well in that equation. In terms of occupancy, we've been transparent that about 21% of our business is exposed to CPI plus rates in terms of the rent escalations. So the higher the inflation, the more that impacts. So again, we've factored in a higher inflation into those numbers. So we think that's fairly robust, and it's why I'm going to say such a big tear between $30 million and the bottom end of that range of $10 million. That's how hard we have to work in a low cost environment. In the outer years of the plan, you can see we put 2% or 3-plus percent comp growth. So again, going back to Shaun's question, yes, from 12 months' time, the end of '27 into '28 and beyond, we will need to see some recovery in the lifestyle footwear sector along with the growth that we're driving in sport. And I hope we've given you confidence we're starting to see some of that coming through.

That's very helpful. If I may just do a very quick question on Sports Direct. The language you used in February back then was 50 shops over the next 6 years. Now you're using 30 shops over the next 3 years and 50 to 100 in the long run. And the language seems to be more positive than February. What has changed? I know you talked a little bit of the trading data for Fountain Gate, Chatswood Chase. What sort of really gave you the confidence that seem to be the store ceiling can be double now found which you're using in February, please?

I might throw that one to Daniel.

Look, I mean, what's occurring is we simply opened the store. We didn't do that much marketing, a little bit of marketing, and let's see what happens and we launched the website on the same day. I've been quite surprised on the strength of that website because people are finding it and it's fast. We figured out how to deliver products next day or thereabouts. So we're getting all the back-end systems right. As an example, we've owned a Hype store in Pitt Street Mall. Well, that even before we ended, the store has been there for 25, 30 years. That store is a very strong store. When I match it up with Fountain Gate, Sports Direct, which is a bigger store, but it's still comparable in terms of what customers are doing, the Fountain Gate store now beat Pitt Street Mall, Hype, which is quite an extraordinary change, right? It's something that is so new. Whilst that's been going on, landlords have started to get a hold of this thing starting to make some noise and some good numbers are coming out. So from their point of view, they're very attractive to that. That's what gets customers into the into this, too. And sport in particular, the big brands of the world, they're marketing a lot of their sports stuff. So what's happening is that centers that I never imagined we'd be talking to in the early part to open stores are suddenly talking to us about how do we unlock some space. One of those centers is in Western Sydney, which I wasn't sure we never get enough space at that size. Suddenly they found the space. That's why there's some confidence here.

Garth Francis from MST Marquee. Just in terms of the store rollout that's adding around 1% of that sort of per annum growth to get to the $1.9 billion growth. You've called out like-for-like sales improving 2 to 3. So is the rest to come from mix? And is that attributed to Sports Direct growth?

There's a big chunk of that in Sports Direct. So if you sort of look at where we are today, let's call it, the $1.5 billion, $1.6 billion mark. And you think about a rollout over that period to 2030 of 30 stores at those store metrics plus a big online business, you can bridge a fair bit of that. There's heat growth still to conquer. So we talked about 38% awareness today, and that's already a big business. So do we believe we might be able to double that business in the next 3 to 4 years? Absolutely, we do. We've got more stores to roll out in that banner. We've got growth to come from Lacoste over that period of time. And yes, we're excited about that brand as well. So you don't have to believe a lot in terms of comps and the new stores to reach that 1.9%.

Great. And then you called out 13 million pairs of shoes having been sold, on a per store volume basis, is that close to or well in advance of FY '19? And just thinking that there was definitely boost in COVID when people were purchasing in your sort of sites. So it would have been difficult to cycle. Has that then deteriorated to the point that you're sort of rebased?

No, I think it's been flat, particularly in the lifestyle space. But every week, we're selling 250,000 to 260,000 pairs. So it hasn't moved enough for what we needed to do. And a lot of it has been, I think, because of innovation. But as, I mean, you give us another one of these, and we got a different ball game. And the whole market is looking for it as we speak. So no, I can't say that we're selling any less.

Okay. And then just the gross margin assumption further out. You've got that gross margin holding flat. You have indicated that Sports Direct would have a -- would pull gross margins down somewhat, you've got the currency benefits. What is helping you -- what gives you the confidence that you can keep gross margins flat, especially in a scenario where input costs are rising, and are you able to pass those on?

So look, it is fair to say that in this environment, and we're starting to see the ranges that are now going to drop in business in January, February, March next year. And there are price increases coming through from suppliers on that. We're seeing those from our distributed brands. We can't back away from that. Absolutely, it will be our intent to pass that through in price. And the proof point about why that might be possible is that every sneaker brand of the world is going to experience the same sort of price increases. So we're going to see price increases across the board in our segment. And if you think about some of the brands we deal with Skechers, who just are powerhouse of volume and styles, they will be able to negotiate the best cost prices with factories because of their scale, and we'll have the benefit of that. But even Skechers will need to put their prices up most likely, and we will pass on to our customers. Whether or not we're able to do that, well, that's all in the realms of speculation.

But Garth, also can I add some to that. I mean the very reason of why Accent's very model has allowed us to grow from the Humble 1 store, if you like, to where we are today is because of its distributed brands, we enjoy not just the margin benefit, but what we do enjoy is that we've got availability of the product that is segmented and of course, we'll do our very best to make sure the whole market gets everything, but it makes us as a stronger business. So if the Vans brand does what I think it can do moving forward, Hoka, Lacoste, these are all new sales and stronger sales than we had before, which means we should get the flow on effect Well, that's what, that's what history has shown or experienced.

It's James Leigh from Goldman Sachs. My question is around the health of the store network. I think we've called out 102 stores that we'll look at and the $7 million EBIT uplift by FY '30. Can you maybe talk to kind of concentration within banners within that? And kind of a follow-up to that is, as we see kind of brands like shift a bit more into sports and lifestyle and the overlap there, like how we think about kind of brand banner differentiation between your different banners?

Might have a first the spread of those stores. Let's say there's a relatively even spread across banners. I'm going to say less in the sports area. Hoka happened more in the lifestyle, given where the comp growth has been over the last few years, but there isn't a particular concentration. We've called out -- I'm going to say that the lack of growth in Vans and certainly, there's a few Vans stores that are in that boat, some that are closing more that we'll have to close over the coming period of time. There's some in Platypus, a very small handful of Skechers. But look, as I've said, and a very small handful in docs, we feel confident we can, we've got a strategy to grapple those sales into our existing banners if those stores indeed have to close. And many of them who we've been very successful with lease negotiations, thanks to David and his persistence with the landlords, in terms of differentiation in Sports Direct, Daniel, perhaps you are the best person to answer that.

The -- we're not so interested in having the most stores. It's having the most profitable stores. Seems to be a big trend going on with -- and Skechers are, in my view, one of the best in the game of how they do this. There are less stores being opened, but indeed can some smaller stores and opening bigger stores in the general areas, and that's been paying dividends. We're learning very quickly, and we've probably done at least 10 of those that have been very successful. In terms of Platypus, some of the examples are, if we can't get the metrics to work, we're not afraid to close the store, we just close it, and online takes over and you start marketing that way. But where we have come very close to closing some stores even as late as yesterday, a store in Northern Australia, we were ready to close it. We're not closing now. The rents come down to what we needed to. It now hits our metrics. This was a profitable store, mind you due, but we were prepared to close it because we think we can get it online.

Maybe one follow-up to that in terms of if you do have some success with kind of shifting customers from closing stores to existing stores and online. Will that change your thinking in terms of how potentially you could close more stores? Like how should we think about that in the next 3 years?

Certainly, not my view. I think in order for the business to be healthy and also to be the distributor of brands, you need online to be growing as -- or to hold the current sales and grow, but we got to keep the stores up there as our banners. I don't think we'll ever be an online business, just an online business. No, we're retailers.

We've got time for two more questions. We'll take one from Chami and one from Ray.

Chami Ratnapala from Bell here. You provided some revenue store numbers and EBIT margins for 2030. Maybe could you summarize how different the business would look in your eyes in that 2030 sort of setup just to -- for the market to understand. How different would it look versus today?

I'll have a first go at that. So look, I think we've made it very clear that our objective is to grow our presence in sport, in particular. So -- and we've talked about that sort of 40% of what we do today, and we want to grow there. And we think we've got the initiatives already well articulated at how we can do that. And similarly, we want to grow our business in vertical apparel. So I think the biggest change will be -- will actually be more diverse and we'll balance up where we're getting our revenue streams from over that period of time and to have a little bit more and talk about the vertical that's in our control than we do today. But is there any, I'm going to say, what's the word, revolutionary or cataclysmic change? I wouldn't think so. We've got to remain disciplined and growing to those categories and keep being the powerhouse to maintain our position in lifestyle footwear.

Yes, Chami, I mean, 8 or 9 years ago in this very room, we had a meeting, and I put up my very audacious goal that was $2 billion. That was the number I wanted. How are we going to get there by 2030. We may miss my desire to -- but we certainly can get to the $1.9 billion based on the work we've done. I'm pushing to get at the $2 billion, but I think will be stronger in sport. I think our position in lifestyle will get longer as we get newer brands. But I have a desire that we will be very strong in vertical, which is based on the learnings I explained earlier and hopefully, what you'll see across the road today will give you some color in where it could go and what we may look like.

Question from Ray.

Ray [indiscernible]. I'm a on long-term shareholder and also a member of Teaminvest. Daniel talked earlier about presently speaking to a number of brands to Australia in to straight, presumably they are not taking them from another distributor?

Yes, no, we wouldn't be.

Is that likely to cannibalize some of the other brands? In other words, people move, Oh, here's the latest and greatest and you lose sales in another area. That would be likely to increase the whole market would just shift what you're selling.

I don't think so, Ray, because as an example, my fault about 15 years ago -- my fault and our founder, Mr. Michael Hapgood, we looked at taking on the brand called Crocs. We didn't, and look what happened in the last 2 years, it's been huge. That would not have cannibalized any of our brands. It's a total different customer. They wear it to the beach. They wear it to wash their car or whatever they do. It's not my kind of cup of tea of a shoe, but the market wanted it, and we were the beneficiaries of selling it as a third-party business in the last 2 years, but I would love to have distributed it too. So no. But your question is absolutely right. Would we go and chase a brand that is in direct competition to what we already distribute? No. So absolutely, we would not do that.

All right. Unfortunately, we're out of time for questions, and thank you, everyone, for those questions. So we're going to close off the line now. So if we can close that off and confirm that's closed, and then we'll talk about next steps for the people in the room.