A few downgrades yesterday, for various reasons, from weak retail sales in Australia for RCG Corporation (RCG), to problems in Africa for Ausdrill (ASL) and operational and financial strains in that perennial underperformer, McAleese Corporation (MCS).
We will know if the retailing sector saw a slide in sales in April when the sales data for that data emerges from the Australian Bureau of Statistics.
Some analysts are tipping no sales growth, or perhaps a small slide.
Certainly Myer (MYR) is hinting at problems with shy consumers by turning its annual June sale of 10 days into a one day sale tomorrow with deep discounts of 30% to 60% for some products.
And small Sydney fashionwear retailer Noni B (NBL) referred to the slide in consumer activity for April and May in its profit downgrade late last week.
Yesterday, the owner of The Athlete’s Foot chain of stores RCG Corporation revealed that weak sales in April and May had forced the company to cut its profit forecast for the year to June.
RCG Corp blamed the weaker than expected earnings growth for this financial year on the long burst of warm weather and the federal budget’s negative impact on consumer confidence.
The weak sales occurred in the company’s clothing and footwear business, while The Athlete’s Foot chain found it hard to generate any growth.
The news saw the company’s shares sold off sharply and they closed down 12.2% at 61c.
RCG 1Y – RCG joins retail slump
Noni B named a similar collection of culprits for its sales fall and profit downgrade, as well as weak trading in the March quarter caused by the company’s attempts to resist demands from consumers for discounted merchandise.
Yesterday the company told the ASX that these problems would cut EBITDA (earnings before interest, tax, depreciation and amortisation) growth from the forecast 15% for the year to June to a range of 10% to 12%.
RCG said the revision was “largely due” to the worse than expected performance in April and May of the company’s RCG Brands division, which is the Australian distributor for the Merrell, Saucony, Cushe, Chaco, CAT (Caterpillar) and Sperry Top-Sider brands of footwear and apparel.
The company said its other division which contains The Athlete’s Foot, was continuing to trade “largely in line with expectations”.
RCG said The Athlete’s Foot chain’s same store sales growth for the 11 months to the end of May was 2.75%, with sales growth in the four months to May being flat. The company said that was a solid result given the tough retail environment.
