Australia's largest footwear business RCG Corp has vowed to proceed with its aggressive store opening plans, after it was punished by the market for downgrading its full-year guidance.
RCG shares reached their lowest levels since 2015 on Friday, after the owner of brands such as Vans, Dr Martens, and Skechers sliced its full-year guidance by up to 5.6 per cent due to "challenging trading conditions since Boxing Day".
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Hilton Brett, the co-CEO of RCG, said the market had reacted "quite severely" to its downgrade, which was not unique among retailers this reporting season and a function of weak consumer sentiment.
"Consumers are feeling financially over-leveraged and have concerns about job security," Mr Brett told Fairfax Media.
"But there are no concerns about anything structural [in the business], and the consumer will come back."
The latest official figures show wages grew by just 1.9 per cent through the year to December quarter. Australians spent more than $25.6 billion in December, but sales for the month dipped 0.1 per cent, confounding hopes for a bumper Christmas sales.
Morgans analyst Jo Little told clients the downgrade wouldn't be well received.
She said many of RCG's targets now "look tough" to achieve, and same-store sales (an important metric in retail, excluding new stores) were "challenged" and margins were "tough".
![Recent acquisitions gave RCG brands such as Skechers, Dr Martens and Vans.](/web/20170305193336im_/http://www.smh.com.au/content/dam/images/g/u/k/d/o/k/image.related.articleLeadwide.620x349.gukc3c.png/1487907176892.jpg)
RCG's sales have skyrocketed in recent years as it aggressively rolls out stores and gulps up businesses, such as retailer Hype DC and Accent Group. It now has more than 400 stores across 10 brands and Mr Brett said the expansion would continue.
But its shares slumped 20¢ on Friday after it said it expected earnings before interest, tax, depreciation and amortisation of between $85 million and $88 million this year, down from $90 million. The fall, to $1.19, took RCG's year-to-date fall to 20.5 per cent.
Reporting its accounts for the six months to December 25, RCG said margins had fallen thanks to a weaker Australian dollar versus the US dollar.
The temporary closure of several stores, a cooler than expected start to spring crimping sandal sales, and weakness in "lifestyle" shoes also hit its results, although-back-to-school results were pleasing.
Ms Little said the half-year accounts were largely in line with expectations, with underlying net profit of $23.3 million, up 34 per cent, slightly ahead of her forecast.
Revenue rose 41 per cent to $289.9, while EBITDA was up 42 per cent to $42.9 million.
RCG declared a 3¢ dividend.
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