RCG Corporation Limited reported record half-year profits on the back of continued strong sales by its operating businesses, which operate The Athlete's Foot in New Zealand and Australia and wholesales Merrell, Chaco and Cushe footwear in Australia.


RCG increased consolidated Earnings Before Interest and Tax (EBIT) from ongoing operations by 49.7% from $3.5 million to $5.2 million for the six months ended Dec. 26, 2010. Consolidated profit after tax increased by 35.1% from $2.9 million to $3.9 million.


The Athlete's Foot (TAF)

Profits grew on the back of the exceptional sales performance of The Athlete's Foot network, which now numbers 145 stores across Australia and New Zealand. The chain recorded total sales growth of 9.7% from $80.8 million to $88.7 million for the half]year, with 6.1% comparable sales growth.


The strong sales growth has continued in the current half with comparable store sales for the month of January rising 10.7%. January is traditionally a strong sales month for TAF as a result of its back to school footwear program.

 

The Athlete's Foot achieved 15.2% EBITDA growth from ongoing operations $4.7 million to $5.4 million for the six month period.
The Athlete's Foot opened three new stores during the half]year, all of which are in the new, larger footprint format. In addition, eight existing stores were converted to the larger format during the period, taking the total number of large format stores to 27 at the end of December 2010.

“The performance of The Athlete's Foot continues to be exceptional,” said Chairman of RCG Corporation Ivan Hammerschlag. “To be able to achieve such consistently outstanding results is a testament to the clear and focused direction of the business and the skill and passion of our management, staff and franchisees. We also continue to be very pleased with the performance of our new larger format stores. This has now become the standard presentation for all new stores and we are working hard to convert existing stores to the new format as quickly as possible.”


Shoe Superstore
Shoe Superstore, a non]mall based branded comfort footwear business acquired by RCG in September 2009, recorded total sales growth of 23% from $1.95 million to $2.30 million for the halfyear, with 18% like]for]like sales growth.

 

“We are very pleased with the performance of Shoe Superstore,” Hammerschlag said. ”The results we are getting are as good as we had hoped for after completing our strategic realignment of all aspects of the business.”

Shoe Superstore opened its first store under RCGfs ownership in the Sydney suburb of Lane Cove in December 2010.

 

“The results from the new store are very encouraging,” said Mr Hammerschlag. ”We are now actively seeking sites for a gradual but sustained rollout of the brand and expect to have at least one more new store opened prior to the end of the financial year.”

RCG Brands
RCGfs wholesale division, RCG brands, commenced business from a standing start on Jan. 1 2010, when it began distribution of the Merrell brand of outdoor, comfort, active lifestyle, performance footwear and apparel.


 

The business turned over $14.0 million in its first 12 months of operation, with sales of $7.7 million for the half]year ending Dec. 26, 2010. EBITDA for the six months was $1.4 million.

Following its early success with the Merrell brand, RCG brands was awarded two other distribution licences by Merrell owner, Wolverine World Wide, Inc. RCG Brands began distributing Chaco and Cushe, both of which are new footwear brands to Australia, just before Christmas 2010.

In addition to the above, RCG opened Australia's first Merrell flagship store in December 2010. As a result of the encouraging early results of the store and RCGfs commitment to raising the profile of the Merrell brand in the Australian marketplace, sites for additional Merrell stores are being sought.

“We could not be more pleased with what RCG Brands has achieved in its first year,” said Hammerschlag. “The business has a fantastic, experienced and energetic team that has fit right into the RCG culture and delivered exceptional results. We are very excited about the prospects for our wholesale business and are actively seeking other quality distribution licences. We hope to be in a position to finalise a further licence before the end of the financial year.”

Dividends
RCG has announced that it will pay an interim dividend of 1.25 cents per share on 23 March 2011 to shareholders registered on the 4 March 2011 record date. This dividend represents a 66.7% increase on last yearfs interim dividend of 0.75 cents per share. RCGfs dividend reinvestment plan will not apply to this dividend.

 

“Our business is healthy, growing and cash generative,”  Hammerschlag concluded. ”We are extremely pleased with our overall results for the half-year and are delighted to be in a position to return a substantial proportion of after tax profits to shareholders by way of dividends.”