From Morgan Stanley after the trading update: (Overweight; PT $1.85)

AX1 provided a positive trading update ahead of its AGM today. Key points:

Top line tracking ahead. Total sales +52% in first 18 weeks of 1H23 ... this is an acceleration from +49% in the first 7 weeks ... and ahead of cons 1H23 sales growth of 20%

Gross margins also beat. +570bps on FY22, which appears to be ahead of cons 1H23 margins of 56.4%

Upside to store targets. Expecting to open 50 new stores in 1H vs. previous full-year FY23 target of 50

Our view – Keep OW. Another strong trading update from AX1, with momentum building into the seasonally important Nov/Dec period. We see upside to consensus 1H23 EPS expectations from strong sales growth, gross margins and store roll-out. However, we expect the market to remain cautious on 2H23 EPS, given the challenging macro backdrop

We view this as a positive read-through for the rest of our apparel & footwear coverage – PMV, KMD and CCX

DISC: Small amount held on SM and IRL