RCG Corporation Limited of Australia announced a record profit for the year ended July 1 with a big boost from its wholesale division, which distributes Merrell and other Wolverine Worldwide footwear down under.
The company reported that EBITDA increased 6.8 percent to $AUD13.2 million, while earnings per diluted share increased 3.6 percent to $3.78.
RCG owns and operates a number of footwear businesses in the performance, comfort and active lifestyle sectors. These include The Athlete's Foot (TAF) Australia retail chain of 148 stores and the Shoe Superstore Group, which it acquired in 2009. RCG's wholesale and distribution subsidiary, RCG Brands Pty Limited, is the Australian distributor for the Merrell, Cushe, Chaco & CAT brands of footwear and apparel.
TAF recorded total sales of $AUD202.4 million, up 1.4 percent from fiscal 2011. Comparable store sales declined 1.1 percent, while EBITDA grew 3.8 percent to $AUD12.0 million. RCG described the results as outstanding given that retail sales for footwear and accessories in Australia contracted by almost 20 percent during the period and may have shrank even more in the premium athletic space. TAF sales strengthened in the second half of the financial year, with comparable growth of 1.2 percent, with the trend continuing in the new financial year. Sales for the first seven weeks of FY2013 have increased by a remarkable 8.9 percent on comparable basis, thanks in part to the launch of the chain’s e-commerce site in June.
Despite growing total sales by 53.2 percent to $AUD8.9 million and comparable sales by 4.9 percent, Shoe Superstore, posted an EBITDA loss of $AUD200,000. Strip shopping precincts, where most SSS stores are located, have been hardest hit by the downturn in specialty retail. This has exacerbated the already difficult environment faced by footwear retailers.
RCG Brands (RCGB), by contrast, experienced another excellent year, in large part by distributing Wolverine footwear brands to Australian department, specialty and outdoor stores. Sales grew 52.1 percent to $24.8 million and EBITDA improved 32 percent to $4.1 million thanks to the growth of the Merrell business and the full scale commencement of the Cat business.