Down 28% in just 1 month, is it time to run with Accent shares?

The Accent Group Ltd (ASX: AX1) share price has rapidly sunk 27.6% over the past month, as we can see on the chart below. After such a significant fall, it could be a good idea to consider the business.

Accent Group is not really a household name, but it sells a wide range of shoe brands that are. The ASX share owns some brands and distributes others, including CAT, Dr Martens, Glue Store, Hoka, Hype, Kappa, Merrell, Nude Lucy, Platypus, Skechers, Stylerunner, The Athlete’s Foot, Trybe, Timberland, Ugg, and Vans.

What’s going on with the Accent share price?

The share price of the shoe business saw a significant increase in the first few months of the year, but its recent decline has largely wiped off those gains. However, it’s still up around 9% in 2023 so far.

Accent hasn’t released any trading updates in the last few months. The last announcement it made was at the end of March when Accent responded to an article published in The Australian containing speculation regarding Glue Store.

The company confirmed it had no intention of selling Glue Store and was actively implementing Glue Store’s growth strategy. Indeed, it had opened two new stores in the prior two weeks.

So, with no business updates, the Accent share price seems to be reacting to other market factors. Investors may be concerned about a weakening retail environment. The retailer Universal Store Holdings Ltd (ASX: UNI) recently gave an update about slowing sales and expectations that could continue into FY24. This could suggest difficulties for Accent because it may share some of the same types of customers, namely those in the younger demographic.

The latest Australian Bureau of Statistics (ABS) numbers showed retail sales were flat in April, perhaps showing signs that cost of living pressures are affecting customers. Certainly, investors may not want to pay as much for the Accent share price if sales growth is slowing, or has stopped.

Is the ASX retail share worth buying?

I don’t think it’s surprising there’s a bit of volatility after the recent run of interest rate increases. Indeed, it’s a challenge for discretionary businesses to keep rising through interest rate rises that theoretically hurt both customer finances and affect the fair intrinsic value of the business in price/earnings (p/e) ratio terms.

However, there are a number of positives with the business, including a growing store network, an increasing amount of sales for its vertical-owned brands, and rising customer numbers. At the end of FY23, Accent Group is expecting to have 825 stores, up from 762 at the end of FY22.

Its stores may not see consistent sales growth every single year, but I think any short-term weakness can turn into a long-term opportunity for investors.

It’s now a case of how low the Accent share price goes and what happens with the profit. If this is the lowest Accent shares go this year then it’s definitely worth buying the dip.

If it falls further, I think that would make it an even more attractive opportunity. Alas, I don’t have a crystal ball to know what’s going to happen next, but Accent seems like a promising ASX share with long-term potential.

According to the projection on Commsec, the Accent share price is valued at 11x FY25’s estimated earnings, though that’s just a forecast at this stage. Profit could be stronger, or weaker, than what’s expected.