Investors have put the boot into The Athlete's Foot owner RCG Corporation despite a standout first-half result, as the retail conglomerate warned a tough trading environment would crimp its full-year earnings outlook.
Despite a 32 per cent gain in half-year profit and increased revenue, RCG Corporation's shares fell as much as 20 per cent during Friday trade before closing down 24 cents - a 17.3 per cent drop - at $1.15 - an 18-month low.
RCG cut its full-year underlying earnings guidance from $90 million to between $85 million to $88 million, warning of tough trading conditions and flat or lower like-for-like sales in some of its footwear retail businesses.
It posted a half-year net profit of $21.2 million helped by a climb in customer sales with revenue for the half year to December 25, up 39.3 per cent to $301.3 million.
Underlying net profit was a record $23.3 million, up 34 per cent.
Co-chief executive Hilton Brett said the recently purchased Hype DC had contributed an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $9.3 million on total sales of $65.5 million, but like for like sales for the year to date were down 2.8 per cent.
"The acquisition of Hype has already unlocked a number of strategic benefits for RCG, including earnings per share accretion, portfolio diversification and the strengthening of RCG's market leadership position," Mr Brett said.
The Athlete's Foot recorded $96.2 million in sales, down two per cent, mainly due to Boxing Day being pushed outside the December trading period this year. Its like-for-like sales to the middle of February were flat, in line with those of the prior year.
RCG's Accent Group, which houses Platypus, Vans and Dr.Martens, reported like-for-like sales growth of 5.3 per cent, down from 25 per cent in the previous corresponding period of 25 per cent.
The business said it will target a full-year like for like retail sales growth of six per cent, following trading improvements at the beginning of February.
Sales rose five per cent for the RCG Brands division, which houses the Merrell footwear brand, lifting retail sales to $15.9 million while earnings fell to $1.5 million for the half-year, from $4.3 million in the prior year.
Merrell felt the most pressure in both sales and gross profit margins thanks to a cooler than usual start to spring impacting sandal sales and a decline in the lifestyle category, the company said.
RCG declared a fully franked interim dividend of three cents per share, up from a partially franked 2.5 cent distribution in the prior year.
RCG STEPS BACK ON GUIDANCE:
* Half-year net profit up 31.7pct to $21.2 million
* Half-year revenue up 39.3pct to $301.3 million
* Dividend of 3cps up from 2.5cps, fully franked
