RCG Corporation Limited soars on results: Is it too late to buy?

Retail group RCG Corporation Limited (ASX:RCG) continues to defy tough conditions.

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What: The full-year financial results of RCG Corporation Limited (ASX: RCG), the owner of The Athlete's Foot shoe store chain, were received well by investors today with the group's shares rising 3.5 cents or 5.4% early in the session. The company reported an 11.2% increase in its net profit after tax (NPAT) to $11.8 million, while its consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) rose 12% to $16.9 million.

So What: Considering the volatile and unpredictable conditions facing Australia's retail sector, RCG Corporation's result highlighted the strength of its business model and strategy moving forward. Thanks to its high level of customer support and the expertise of its shoe sales team, its flagship Athlete's Foot chain recognised like-for-like sales growth of 2.7% for the year and EBITDA of $13 million (up 6.6%).

Meanwhile, RCG Brands, which is the group's wholesale, distribution and integrated retail division, grew EBITDA by a massive 37.7% to $6.9 million with sales up 62% to $46.6 million. RCG's established brands CAT and Merrell also delivered double-digit sales growth for the year.

Over the year, earnings per share (EPS) ballooned out to 4.58 cents while it increased its full-year dividend by 12.5% to 4.5 cents, giving it a fully franked yield of 6.6%.

Now What: Looking forward, RCG recognises that its margins are key to its success. While a number of Australian retailers are engaging in "race to the bottom" activity, whereby they aggressively cut prices to increase sales, RCG will continue to focus on driving overall earnings. The company said: "This resilience will be an important factor in continuing to drive (The Athlete's Foot) forward in what is clearly a very challenging outlook for retail".

RCG Corporation has proven to be an outstanding investment for shareholders in recent years. In fact, according to its report, the company has delivered a total shareholder return of 263% over the last six years, at a compound annual growth rate of 24%. At today's price RCG Corporation is still looking like an outstanding investment prospect.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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