RCG BLAMES SELLDOWNS AS SHARES TAKE A TUMBLE
THE Athlete’s Foot owner RCG has cut its annual earnings forecast and has blamed a widespread selldown of retail stocks for a significant drop in its share price.
The shoe retailer says housing market concerns, subdued wage growth and the pending arrival of Amazon have made investors nervous about the retail sector.
“The board believes that RCG has been caught up in the widespread selldown of retail stocks over the last few months due to a number of factors,” the company said in its trading update yesterday.
It said those factors included declining consumer confidence, weak wage growth, housing market concerns, rising interest rates and the “perceived impact that the market entry of Amazon may have on the Australian retail landscape”.
RCG’s share price began the year around $1.49 and was at 83¢ by the end of April – a 44 per cent slide in four months.
Its shares fell a further 27.71 per cent yesterday, closing at 60¢ following the disappointing trading update that cut the group’s full-year earnings guidance for a second time this year.
The company also reassured the market that the former owners of its Accent business, which houses Platypus, Vans and Dr Martens, will not sell their shares when their escrow expires on May 27.
“Those former owners who are directors of RCG have confirmed that they have no intention of selling shares into the market at these levels,” it said.
RCG expects earnings before interest, taxes, depreciation and amortisation to be in the range of $74 million to $80 million for 2016/17, down from its February guidance of $85 million to $88 million.
The company attributed the downgrade to softer shoe sales, including flat like-forlike sales during March and April for its Accent and Hype businesses, and flat like-forlike sales for the year to date at The Athlete’s Foot.