RCG Corporation Ltd (ASX: RCG)

Investment from Brett Blundy: Footwear retailing group, RCG Corporation’s stock stormed up about 12.7% on November 27, 2017 while the group announced that billionaire, Mr. Brett Blundy through his associated interests, has acquired 64 million ordinary shares from RCG directors Craig Thompson and Michael Hapgood, and William Duell, and this number represents 11.82% of the Company’s issued shares. The shares were acquired for $0.95 per share, and the price represents a 20% premium to the Company’s last closing price of $0.79. The sale represents 50% of their Company shareholdings. With this, interests associated with Mr. Blundy are now holding 14.4% of the Company's issued shares, constituting the biggest shareholder. Mr Blundy is said to have a strong industry reputation and a track record in global retail expansion, and the increased investment in RCG showcases more potential in the stock.

The group during its recent Annual General Meeting revealed that it has delivered about 807% in terms of total shareholder return over 11 years to June 2017. FY17 result for RCG has been decent with the underlying EBITDA of $78.3 million, up 30%, with cashflow from operations rising 3%. RCG’s online sales growth was outstanding with 79% rise and total digital sales grew 99%. The group’s store footprint has also grown to 430 stores across Hype, Platypus Shoes, The Athletes Foot and Skechers stores. The group now intends to change its name to Accent Group.

With improving like for like sales and earnings in the first quarter of FY18 and more room for upwards momentum, we maintain a “Hold” recommendation on the stock at the current price of $0.89

Store Network (Source: Company Reports)

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