Net profit of RCG’s Corp dipped 2.6% to $29.2 million in 2016-17 after the footwear retailer wrote down the value of its Hype DC business – acquired last July for $99 million – by $9.7 million, which wasn’t a bad result given the big sell off after the surprise downgrades in sales outlook in February and May.
The company however (and as you would expect) played up the better looking ‘underling’ performance saying the underlying net profit before asset impairments rose 21% to $39.9 million, beating consensus forecasts around $33.6 million.
Revenue jumped 44% to $636.15 million, the company said in a statement to the ASX.
Underlying EBITDA rose 30% to $78.3 million also topping market consensus around the $77.7 million mark and in line with the company’s revised guidance of between $74 million and $80 million.
RCG had originally forecast EBITDA of $90 million in 2017, compared with $60 million in 2016, but those downgrades in February and May ended those hopes thanks to slower same-store sales growth slowed in key brands.
EBITDA at the Accent footwear group (bought in 2015) jumped 57% to $67.1 million as same-store sales rose 2.6%, offsetting a 4% drop in wholesale sales.
Gains at Accent offset weaker earnings at The Athletes Foot where EBITDA fell 8% to $12.6 million and RCG’s licensed brands business RCG Brands, where earnings slumped more than 62% to $3 million off the back of a 2.6% drop in same-store sales.
RCG maintained its final dividend at 3 cents a share, taking the full year payout to 6 cents a share, up half a cent (the interim).
Co-CEO Hilton Brett said in yesterday’s statement:
“We are pleased with the results that the group has delivered and the progress we have made over the last 12 months. In addition to delivering another record result, we completed the acquisition of Hype DC and fully integrated it into our operating structure. In addition, we opened more than 50 new stores, commenced the rollout of the TAF performance store format, and delivered three new, best-of-breed eCommerce sites.”
He forecast another year of profit growth in 2018.
“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.”
It has more than 430 stores across 10 retail banners and exclusive distribution rights for 10 international brands.
The market clearly liked the news and the confident outlook, sending the shares up 6.3% to 84 cents.
