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Sneaker group RCG shares rally on result

Petrina Berry  |  28 Aug 2017Text size  Decrease  Increase  |  

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BRISBANE - [AAP] Shoe retailer RCG Capital's (ASX: RCG) rollout of 50 new stores and the acquisition of hip sneaker business Hype DC have helped drive its annual underlying profit higher.

Shares in RCG Capital have jumped almost 7 per cent after the shoe retailer unveiled an underlying profit of $39.9 million in the year to July, up 21 per cent on the previous year.

However, the group's $29.2 million statutory net profit was down 2.6 per cent on the prior year after accounting for acquisition-related costs.

RCG says it has fully integrated Hype DC into its Accent business after completing the $99 million acquisition in August last year.

The group's Accent business, which includes Platypus, Skechers, Vans and Timberland, delivered $67.1 million of underlying earnings, up 57 per cent on the prior year.

This was largely due to the addition of 65 Hype DC stores, the distribution rights to six international brands and the rollout of 50 new stores, including 19 Skechers and 17 Platypus shops.

The group has also launched new Platypus, Skechers and Vans websites and says digital sales were up 99 per cent for the year.

Accent's total sales for the year rose 59 per cent to $512.5 million with like-for-like retail sales up 2.6 per cent on the prior year.

RCG's shoe chain, The Athlete's Foot, had an 8 per cent fall in EBITDA earnings to $12.6 million as sales growth slowed to 0.8 per cent, and like-for-like sales up 0.5 per cent.

The group's EBITDA earnings in its other division, RCG Brands--which includes Merrell, CAT and Saucony--fell 62 per cent to $3 million, although total sales were up 1.2 per cent at $70.3 million, wholesales sales were up 0.8 per cent, retail sales grew 1.7 per cent but like-for-like sales fell 2.6 per cent.

RCG co-chief executive Hilton Brett described the results as disappointing, but said the sharp reduction in gross profit and EBITDA had been flagged.

He said The Athlete's Foot had been affected by the temporary closure of three of its largest stores for reformatting, while RCG Brands were hurt by a significantly lower exchange rate than in the prior year.

Mr Brett said he was confident both businesses would have a stronger 2018 financial year.

"Our management team has developed and implemented processes, structures and plans ideally suited to countering the threats and capitalising on the opportunities that we expect to face over the next 12 months and beyond, and we expect another year of profit growth," he said.

He said the group, which has 430 stores across Australia and New Zealand, plans to merge the digital and bricks and mortar channels to deliver seamless, unrivalled consumer experiences through click-and-collect, click-and-dispatch, and three-hour delivery.

Shares in RCG Capital were up 5.5 cents, or 6.96 per cent, at 84.5 cents at 1230 AEST.

RCG CAPITAL HEADLINE RESULTS:

* Full-year net profit down 2.6pct to $29.2 million

* Underlying net profit up to 21pct to $39.9 million

* Revenue up 43.7pct to $636.15 million

* Final dividend of 3 cents a share, fully franked, up from 2.5 cents

 

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