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RCG defies tough market

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Shoe retailer RCG Corporation says it’s on the path for earnings per share growth this year despite what it describes as the worst trading conditions in three decades.

RCG operates The Athlete’s Foot and Shoe Superstore Group, and its subsidiary RCG Brands distributes the Merrell Cushe, Chaco and CAT footwear and clothing brands in Australia.

Despite lower sales in the year to date, the company expects to post in February a first half profit similar to last year’s $3.93 million, chairman Ivan Hammerschlag told RCG’s annual general meeting on Tuesday.

Earnings per share for the full year to the end of June are expected to grow and dividends would remain stable, he said.

“These are the worst trading conditions I have seen in the 30 years I have been involved in retail,” Mr Hammerschlag said.

“We are delighted that both our business model and our individual business units are sufficiently robust to withstand this challenging environment.”

Sales in The Athlete’s Foot business for the four months to the end of October were down 1.2 per cent on the previous corresponding period, and down 3.3 per cent on a like-for-like basis.

Two new stores had opened since the beginning of the financial year.

“Given that according to the ABS (Australian Bureau of Statistics), the footwear sector is down more 10.6 per cent for the September quarter, we believe that we are still growing market share,” Mr Hammerschlag said.

Even if like-for-like sales remain lower than the previous year, The Athlete’s Foot is expected to maintain its full year pre-tax profit levels, he said.

The company is working on an online extension of The Athlete’s Foot business, with a launch expected in mid-2012.

The Shoe Superstore business posted sales growth of 52.7 per cent in the first four months of the financial year as it continued to expand.

Over 10 per cent of its sales are online and the launch of a new online store in the next two weeks was expected to improve that performance, Mr Hammerschlag said.

RCG Brands had sales growth of 20 per cent in the first four months of the financial year, suggesting significant market share growth given the challenging trading conditions, Mr Hammerschlag said.

RCG shares lost 2.5 cents to 45 cents on Tuesday.