By Aimee Chanthadavong

Just as predicted, trading for RCG Corporation remained strong for the Christmas period, resulting in the company reporting positive half-year profit results.

The parent company of The Athlete’s Foot (TAF) and Shoe Superstore said consolidated profit tax increased by 35.1 per cent from $2.9 million to $3.9 million.

Ivan Hammerschlag, RCG Corporation chairman, told RetailBiz that while the conditions in the retail industry remained difficult, customers remained loyal to its brands, underpinning its success.

“It’s not just been in the last six months but for the last 10 to 14 years, the business has been operating on a fit for service model where we provide fitted shoes for our customers’ feet. And we haven’t changed over and above that and it’s the only shoe store that I find that people are on their knees,” he said.

“I think because our customers have such a high level of trust in our brand, in a tough time likes this, they stayed with the brand they trusted most,” he said.

This was evident in TAF’S sales growth of 9.7 per cent from 80.8 million to $88.7 million for the half‐year, with 6.1 per cent like‐for‐like sales growth. The strong sales growth has continued in the current half with like‐for‐like sales for the month of January 2011 rising 10.7 per cent.

Hammerschlag said the larger TAF format stores are also performing well.

“We were getting responses from our consumers that smaller format stores were too small and there wasn’t enough room to be served. We’ve increased the floor space from 90 to 160 square metres. We have also changed the décor and made it more contemporary while broadening the offer with comfort footwear and that has brought extra consumers to our store,” he said.

“We continued to look at ways to grow our business and we were getting a lot of feedback about the size of store, ‘why don’t you carry this’ and so we’ve also extended our range for kids.”

TAF opened three new stores during the half‐year, all of which are in the new, larger footprint format. In addition, eight existing stores were converted to the larger format during the period, taking the total number of large format stores to 27 at the end of December 2010.

RCG’s non‐mall based branded comfort footwear business, Shoe Superstore, recorded total sales growth of 23 per cent from $1.95 million to $2.30 million for the half-year, with 18 per cent like‐for‐like sales growth.

Shoe Superstore opened its first store under RCG’s ownership in the Sydney suburb of Lane Cove in December 2010 with plans of gradually rolling-out the brand and having at least one more new store opened prior to the end of the financial year, Hammerschlag said.

RCG’s wholesale division, RCG brands, commenced business from a standing start on 1 January 2010, when it began distribution of the Merrell brand of outdoor, comfort, active lifestyle, performance footwear and apparel.

The business turned over $14.0 million in its first 12 months of operation, with sales of $7.7 million for the half‐year ending 26 December 2010. EBITDA for the six months was $1.4 million.

“Merrell is quite unique in that it’s an outdoor brand that also does ordinary shoes. It hits into the sweet spot of the Australian psyche as Australians are into all the outdoor activities but also want everyday shoes, making it very versatile,” Hammerschlag said.

RCG opened Australia’s first Merrell flagship store in December 2010. As a result of the encouraging early results of the store and RCG’s commitment to raising the profile of the Merrell brand in the Australian marketplace, sites for additional Merrell stores are being sought.