Magazines Archives - 2009 August

RCG expects new TAF licence to boost sales
Story 9 - News

AUSTRALIAN investment company RCG Corporation Ltd, which operates The Athlete’s Foot (TAF), has obtained a long-term licence agreement from the sports footwear chain’s US-based franchisor, NexCen Brands’ Australian subsidiary, TAF Australia LLC, for up to 249 years with a one-time payment of A$7.36 million (US$6.2 million).

According to the agreement, RCG will receive a royalty-free exclusive licence for the brand’s trademark in over 130 stores throughout Australia and New Zealand, a move that will boost the company’s pre-tax profit in its 2009-10 fiscal by A$1.2 million.

RCG chairman Ivan Hammerschlag told the local media that under the new deal, other restrictions imposed in earlier agreements were removed. “We can now enter Asia’s footwear market by using our expertise to open a parallel brand in any part of the world. We could also buy a rival footwear brand. Previously, we were prevented from doing so,” he revealed.

In the first six months of this year, RCG saw a 17% sales growth for footwear brands, raising the retailer’s total sales for fiscal 2008-09 by 15%. Sales growth is expected to continue as the company moves to upgrade its TAF store format.

“The roll-out of The Athlete’s Foot new large-format stores has continued, with four stores now ... converted. Sales from the converted stores have exceeded all expectations, with like-for-like sales increase in excess of 30%,” said Hammerschlag, noting that the current downturn has not impacted the business. “When times are tough, people tend to focus on themselves and want to keep fit. Footwear sales have always held their own — similar to gym memberships, which have not fallen during difficult economic conditions,” he explained.

“This investment is an exceptionally sound deployment of our capital, one that provides us with excellent returns. It not only delivers long-term certainty to the business, but secures a significant increase in The Athlete’s Foot’s annual earnings and, with that, delivers substantial shareholder value,” the RCG chief maintained.

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