Retail billionaire Brett Blundy has no fear of Amazon or the slow down in consumer spending – he has just extended his empire by by becoming a major shareholder in the struggling footwear retailer, RCG Corporation.
Blundy yesterday emerged as the biggest single shareholder in footwear retailer RCG, after buying a 11% stake in the company from the New Zealand vendors of Kiwi footwear retailer, Accent (which RCG bought two years ago).
That took his stake to 14.4% of RCG, whose shares immediate leapt higher, closing at 89 cents, up 12.6% on the day as punters speculated on a takeover offer. At the close RCG was worth around $482 million, so a bid would have to top the $500 million mark.
“Mr Blundy has a strong industry reputation and a track record in global retail expansion,” RCG said in a statement to the ASX.
"The board welcomes his increased investment in RCG and his endorsement of the company’s strategy."
Mr Blundy is the chairman of investment group BB Retail Capital, which owns stakes in the listed jewellery chain Lovisa, the listed homewares group Adairs and the unlisted lingerie companies Bras N Things and Honey Birdette.
The group is also a large shareholding in ASX listed property group Aventus Property, with owns 14 shopping centres across Australia. he also has extesive rural interests focused on beef cattle in northern Australia, especially the Northern Territory.
Mr Blundy has acquired the parcel of 64,000,000 shares from RCG directors Craig Thompson and Michael Hapgood, and William Duell who were the owners of the New Zealand footwear group Accent, which RCG acquired in 2015 for $200 million. Accent was the owner of the retail chain Platypus Shoes and the distributor and retailer of big name brands including Vans, Skechers and Dr. Martens.
RCG’s net profit 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 said the better looking ‘underling’ performance 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.