RCG Corporation has reported a record half year profit despite declining sales for its footwear brands The Athlete's Foot (TAF) and Super Shoestore (SSS).
The company, which also runs a wholesale and distribution division in addition to the TAF and SSS businesses, today announced a 5.8 per cent lift in earnings before interest, tax, depreciation and amortisation (EBITDA) to $5.43 million. Consolidated profit after tax (NPAT) was also up by 2.4 per cent to $4.02 million for the six months to December 25, 2011.
Individually, however, the TAF business recorded total group sales of $86.6 million, a drop of 2.3 per cent on the same period last year, with like-for-like sales also down four per cent, from $87.5 million to $84.0 million.
Sister company SSS also suffered a decrease in like-for-like sales, down 3.5 per cent on the prior year, but still managed to post a total sales growth of 50.9 per cent – from $2.44 million to $3.69 million for the half year.
RCG's wholesale and distribution division fared best overall, with a sales rise of 47.6 per cent to $11.45 million, compared to $7.76 for the previous corresponding period.
EBITDA for the half year was $1.92 million, an increase of 36.2 per cent on the previous year's $1.41 million, with the division on track to achieve further sales growth of up to 35 per cent and a profit growth of 20 percent for the 2012 financial year.
Chairman of RCG Corporation, Ivan Hammerschlag, said the growth of the company's wholesale and distribution division can be attributed to an increase Merrell sales of 31.1 per cent and the commencement of the CAT (Caterpillar) distribution business, which contributed $990,000 in sales during the half year.
“We are exceptionally pleased with the performance of RCG Brands in what can only be described as very difficult trading conditions. The growth of the Merrell business is particularly pleasing and there is little doubt that we are growing market share in this space,” Hammerschlag said.
“The TAF results are also good, considering that ABS data shows that the retail footwear and accessory sub-category was down 5.9 per cent for the six months to December 2011, and this suggests that TAF continues to over-perform relative to the sector and continues to grow its market share.”
Looking forward, Hammerschlag said the company expects to convert two more TAF stores to a larger format, trialled via four stores in Australia last year, and will unveil a new -e-commerce capability during he last quarter of the financial year.
RCG will also increase investment in the fledgling e-commerce facility launched for its SSS business in January.
“The online channel presents a significant opportunity for Shoe Superstore. Ongoing investment in, and focus on, the online channel is expected to be a major focus and driver of growth over the coming months,” Hammerschlag said.
After acquiring the CAT footwear licence in April 2011, RCG has also recently acquired the CAT apparel licence with effect from January 1, 2012, with CAT expected to be a significant driver of future growth for the business in both the industrial and casual sectors.