# AX1 - Accent Group



## GumbyLearner (17 January 2010)

Thought it was time to start a thread.

RCG is an Investment Holding company which owns the Athlete's Foot in Australia and New Zealand.

They have achieved like-for-like sales growth of 10% for the 4 months to October 09 compared to 08.

They also recently announced sales growth of 30% in their new re-furbished large format stores which they are progressively rolling out into 2010.

Even though most stores are mall based, they recently acquired the 3 North Sydney based Shoe superstore.

They also recently bought out the licence/royalty rights of the US parent for the next 249 years, which they claim will be appreciative to earnings to the tune of $1.2M a year and also enable them to increase floor product by roughly 150 new lines (that's a guestimate ). And also have made an agreement as the Sole distributor of Merrill footwear throughout Australia. Looks like they are expanding to wholesale to compliment their retail spread.

They have over $20M cash, no debt and what looks like good sales growth.
Tariffs on footwear have also been lowered to 5% which should also add to earnings into 2010 and beyond.

Currently sitting on 57cents a share. Management also claim that 70% of profits will be passed onto shareholders in the form of dividends.

Any thoughts? 

DYOR


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## oldblue (17 January 2010)

*Re: RCG - RCG CORPORATION LIMITED*

The SP's in a nice uptrend but is already 153% above its 12 month low!

And trading on an historical P/E of 21.4, yield around 2.5%.

Looks a little pricey for me.


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## GumbyLearner (22 February 2010)

Nice announcements today.

First interim divvy for the company.

Increased sales and profits like-for-like on 2008-2009.

DISC: I hold.


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## GumbyLearner (30 May 2010)

Go the essentials

RCG steps up profits

http://www.ragtrader.com.au/news/rcg-steps-up-profits

27 May 2010

SYDNEY: Footwear giant RCG Corporation is continuing to defy the financial downturn, with a healthy profit forecast, store rollouts and new brand acquisitions.


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## GumbyLearner (16 June 2010)

Massive volume today 16 million shares traded on no news or announcements.
Can anyone out there potentially suggest why? :walker:


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## GumbyLearner (9 November 2010)

This stock is still defying the retail downturn. Should also benefit from the strong Aussie dollar.

*Athlete's Foot boots RCG into FY11* 
November 9, 2010 - 10:29AM

*AAP* 

Clothing retailer RCG Corporation Ltd has reaffirmed its net profit guidance to rise by around a quarter in 2010/11.

"We reaffirm our earlier FY2011 profit guidance of net profit after tax (NPAT) of $8.4 million - $8.8 million," the company said at its annual general meeting in Sydney on Tuesday.

*"This range represents an increase over (2009/10) of 22 per cent to 28 per cent."*

RCG, which has The Athlete's Foot and Shoe Superstore in its portfolio, posted NPAT of $6.89 million in the 2010 financial year, up 30.6 per cent from a year before.

In financial year 2009/10, The Athlete's Foot posted its sixth straight year of like-for-like sales rising by more than eight per cent.

Sales in chain store The Athlete's Foot increased 10 per cent in the first four months of the current financial year, including the opening of three stores to take the chain's total to 145.

Like-for-like sales growth in the chain during the first four months of the 2010/11 financial year was six per cent, RCG said.

The company said RCG Brands would open its first Merrell flagship store at Castle Towers in north-western Sydney in December 2010.

Shares in RCG were untraded at 63 cents on Tuesday.


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## GumbyLearner (14 December 2010)

Nice announcement again today.

From Ragtrader

http://www.ragtrader.com.au/news/merrell-makes-australian-mark

It also announced that The Athlete’s Foot chain experienced like-for-like growth of 6.6 per cent for the five months to the end of November this year. This included a like-for-like growth in November of 10.3 per cent. It said growth for the first two weeks of December was in excess of five per cent compared to the same time last year.


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## GumbyLearner (21 February 2011)

Still defying the retail downturn.

Courtesy of Rag Trader
*RCG reports "record" half-year profit*

21 Feb 2011
http://www.ragtrader.com.au/news/rcg-reports-record-half-year-profit

RCG Corporation has reported nothing but good news with regard to the performance of its The Athlete's Foot and Shoe Superstore retail banners.

The publicly listed company revealed The Athlete's Foot experienced sales growth of 9.7 per cent in the six months to December 26, 2010, will total sales measuring $88.7 million. Like-for-like sales were up 6.1 per cent.

RCG's comfort footwear business, Shoe Superstore, also experienced a jump in sales in the same period, with total sales lifting from $1.95 million in the first half of 2009/10 to $2.3 million in the first half of 2010/11. Like-for-like sales grew by 18 per cent.

The sales figures pushed RCG's consolidated net profit after tax to $3.9 million, an increase of 35.1 per cent on the prior year and a reported "record" result.
**********************************************************************************


Forgot to add a 66.7% increase in the relatively new interim dividend.  NOICE!


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## Klogg (31 May 2012)

Bought into this not too long ago @ 33c...

$14.5mil cash position (against an $80mil market cap), no debt and one of the only retailers turning a profit in the current market.

And at my entry price, ~9% FF dividend .

Anyone else following this @ all?


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## tinhat (5 July 2012)

Is anyone following this stock. I own. It's quite volatile and up over ten percent in the last two days. Price moves by up to 20% in the space of a couple of weeks. It looks like it may have bottomed though looking at the charts??? Could be a turn-around.


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## Klogg (5 July 2012)

tinhat said:


> Is anyone following this stock. I own. It's quite volatile and up over ten percent in the last two days. Price moves by up to 20% in the space of a couple of weeks. It looks like it may have bottomed though looking at the charts??? Could be a turn-around.




I follow it - picked it up earlier this year at an average price of 32c (bought a few more after the initial @ 33c)

I noticed that they have a HUGE cash holding, an awesome payout ratio and a very nice dividend as a result. Management are very good and quite conservative with what they do.

Lately, both fool.com.au and Roger montgomery have mentioned it, so it's being noticed a little more.

If you're a value investor, take a look @ their balance sheet and you'll be thoroughly impressed IMO... and that's without mentioning their ability to gain market share.

Tinhat - any viewpoints from a technical front?


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## tinhat (5 July 2012)

Klogg said:


> Tinhat - any viewpoints from a technical front?




I'm not a techie or a trader. I'm a "value investor" too. I  bought some for my SMSF. I'm trying to apply more technical analysis to make some better decisions on timing entry though - follow momentum. On the monthly chart  the commodity channel index turned positive at the end of January and the Coppock indicator (which has a long lag) looks like it is turning around too (see attached). On the weekly chart the MACD has been rising since mid-January. So although the price has fallen since January, the indicators are contrary to the price since January. In any case we can say it is getting support at $0.31 at least.


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## Klogg (8 July 2012)

tinhat said:


> I'm not a techie or a trader. I'm a "value investor" too. I  bought some for my SMSF. I'm trying to apply more technical analysis to make some better decisions on timing entry though - follow momentum. On the monthly chart  the commodity channel index turned positive at the end of January and the Coppock indicator (which has a long lag) looks like it is turning around too (see attached). On the weekly chart the MACD has been rising since mid-January. So although the price has fallen since January, the indicators are contrary to the price since January. In any case we can say it is getting support at $0.31 at least.
> 
> View attachment 47767




Yeah, the 31c support seemed like a stand-out when I was buying, even with my limited knowledge of T/A.

Good to see I'm not the only one who thinks this is good value


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## Ves (8 July 2012)

Klogg said:


> I follow it - picked it up earlier this year at an average price of 32c (bought a few more after the initial @ 33c)
> 
> I noticed that they have a HUGE cash holding, an awesome payout ratio and a very nice dividend as a result. Management are very good and quite conservative with what they do.
> 
> ...



I don't know much about this company  - it has come up in some brief scans of the market in the past though.

Two things interest me  -  the cash balance, the lack of debt (and reasonable ROE).

You say that they have the ability to gain market share - how do you think that they can achieve this?  What makes you think that they have an existent competitive advantage?  Just curious for a starting point.


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## Klogg (8 July 2012)

Ves said:


> I don't know much about this company  - it has come up in some brief scans of the market in the past though.
> 
> Two things interest me  -  the cash balance, the lack of debt (and reasonable ROE).
> 
> You say that they have the ability to gain market share - how do you think that they can achieve this?  What makes you think that they have an existent competitive advantage?  Just curious for a starting point.




I often wondered this when I first found the stock as it was coming up in some of my searches. After doing abit of research, I found that they prided themselves on being a 'full-priced' retailer (which I thought was suicide in the current market), but later found that they had won awards for their innovative approach:
http://www.franchise.net.au/news/brw-award-makes-2011-an-even-bigger-year-for-the-a

After digging further, I found they spent a lot on:
- Training their staff to be able to fit someone's shoes correctly
- The sizing of their stores
- The offerings of each of their lines (Merrell, CAT, Athlete's Foot, etc)

And now having been in to a few stores, I can understand why. To someone who just walks in off the street and knows exactly what they want and how a shoe should fit, they won't buy from here. But for others who need shoes that fit right, they'll manage to make a sale.

Further to this, the company has also licensed themselves to sell CAT footwear/apparel in Australia, in effect feeding off the 'mining boom'. They're actually the first retailer to have licenses for both.

It's this constant evolution that keeps them in good stead IMO.


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## Klogg (8 July 2012)

Ves said:


> I don't know much about this company  - it has come up in some brief scans of the market in the past though.
> 
> Two things interest me  -  the cash balance, the lack of debt (and reasonable ROE).
> 
> You say that they have the ability to gain market share - how do you think that they can achieve this?  What makes you think that they have an existent competitive advantage?  Just curious for a starting point.




Also on the topic of market share, if you read the half-yearly announcement, Hammerschlag makes a mention to the downturn in the footwear sector (as per ABS data) decreasing by ~10%, yet their sales only dropped by ~4%, resulting in a gain of market share. (It's probably better explained within the announcement itself)


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## Ves (9 July 2012)

Thanks Klogg - the problem with all of these systems is that they're seem very easily replicable by a competitor (the expertise and pricing tactics). After all shoes are pretty much a commodity product.  I work out the adjusted ROE (ignoring the historical losses - and using contributed equity + reserves - $64 million) to be around 12-13% which confirms this.  

However - I do note the unique licences and obviously their branding.  This is where the potential may lie.  If these are strong, they could win market share.  

The financials look pretty clean on my first glance.  There doesn't seem to be any nasty surprises, but you would need to keep an eye on stock obsolence and such.  The dividend isn't always paid out of operating cashflow, but this seems to be due to fluctuations in working capital and timing of payments.  Be mindful that the cash buffer that they have seems to be decreasing, but on the same token they are re-investing a lot of this back into expansion.

I think I would require a bigger margin of safety for a business like this.

I will have a read of some "investor presentations" that they have released and see if it increases my understanding.


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## Klogg (9 July 2012)

From what I've seen, management seem to want to return this cash to shareholders/expand over a period of time, as the cash amount is diminishing steadily over the past few years (as you mentioned). But, this is a good thing - holding too much cash as a safety blanket is just plain wrong and it should either be reinvested or returned to shareholders (and it also negatively impacts ROE). 
Probably explains why they've got a 9% FF dividend yield atm (or close to).

In regards to adjusted ROE - how far back are you going with those calculations? I would normally go back 5 years or more, but given the change in management and in strategic direction (sale of king of knives and so on), I only went from 2008 onward (which is why I didn't get the same 12-13%).
I wouldn't normally just 'ignore' the previous years of a company, but in my opinion, this particular case warrants it.

I agree on the stock obsolescence - that is something that I took as an acceptable risk, much like any other retailer.

Would love to hear your thoughts after you get a chance to read investor presentations.


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## Ves (10 July 2012)

I did a bit more digging.  As I expected to find, RCG is a company that has had a bit of a growth spurt and now is starting to find itself in a retail market in Australia that it is reaching much closer to saturation than ever before (and also tough economic conditions).  The last few results have been really good, but that means that they now have a higher base on which they need to build growth.  Each dollar of sales requires more effort in terms of costs and capital.

Return on Revenue ratios

		          %
2011			30.76
2010			32.78
2009			34.57
2008			24.07
2007			10.78
2006			17.03

2012HY	        24.53
2011HY		29.55

This means that for every dollar of sales they made $0.30 in net income (before taxes) in 2011.   Interestingly this is only $0.245 in the 2012 half year.  They clearly need a catalyst to arrest this trend.  They did mention that they have invested slightly ahead of the curve, but I guess that depends how much of that is management fluff and what is reality. Most brokers / analysts seem to think revenues & earnings will be flat over the next few years.  Hard to argue with that in this environment, unless they can find a way to expand.  

As I said, in a business like this, in these conditions I would need a much bigger margin of safety.  Would probably prefer to look at DJS / MYR / JBH first if they extend their losses over the next year.


That's my perspective on it after having a further look -  always assume I am wrong, I would love to hear some counter-arguments.  Always enjoy the discussion.


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## Ves (10 July 2012)

Also forgot to mention, I don't 100% understand the cash flow, but it always pays to remember that you can be profitable in retail and still be losing cash.  It's often hard to tell until it is too late. It all comes down to working capital and capex management (which aren't always reflected in the P & L).  If someone can explain how this works in a business like this in more detail or point me in the right direction, I'd be much obliged.


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## Klogg (11 July 2012)

In regards to profit per $ of revenue, I did notice that in the half-year. That being said, I would imagine the 25c is still healthy, especially in a retail climate such as this one.

I did re-visit their cash flow statement too. I remember there were two things that I noticed were the catalyst for the overall deduction in cash holdings, and these were:
- _Payments to suppliers/employees:_ From what I can tell, they've had to increase their inventories because their range of brands/products has increased. I do want to check this out further though...
- _Dividends paid:_ The payout ratio is huge and results in a net loss of cash. However, I remember reading that this is management's intention (they don't want to hold too much cash and have no interest in acquisitions, so they would rather return it to shareholders). If I can find this piece of info again, I'll link it to you.

One thing to look out for though is their mention of closing a few stores due to increased rents. From memory, I believe it was 3 stores that are closing. The impression I got though was that this would be offset with growth in other companies (SSS/RCG Brands).

As for DJS/MYR/JBH - I don't particularly believe management are on par with what I'd expect and their prospects for growth aren't so great, so I stay away.


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## RogueTrader273 (30 September 2012)

*RCG - Poised to break out!*

RCG looks poised to breakout with recent extreme volume and a very bullish-looking ascending triangle formation. Fundamentals are also excellent with rising profits and rising ROE, and pays a 7.8@ dividend to boot!


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## tinhat (30 September 2012)

I just had a quick look back over this discussion. One thing that I like about RCG is The Athlete's Foot business. One of the things analysts have been lamenting about with retail is that the bricks and mortar retailers, especially the department stores have failed to offer the one thing they have that on-line can't compete with and that is in store customer service. Mark McInnes cut costs at David Jones by cutting costs including front of store staff. All the department stores have shockingly bad customer service. The staff at JB Hi Fi have amazingly decorated fingernails but can't tell you a damned thing about the digital cameras they sell.

The one thing The Athletes Foot does is that it value adds just like good old fashioned retail use to do. If shoes were just commodities we would all be walking around in Dunlop Volleys. By giving proper customer service, supposedly finding the correctly fitting shoe for the customers needs they make price less relevant and guide the customer towards making the purchase decision. The Athlete's foot is a good brand and a good business model.


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## Boggo (30 September 2012)

*Re: RCG - Poised to break out!*



RogueTrader273 said:


> RCG looks poised to breakout with recent extreme volume and a very bullish-looking ascending triangle formation. Fundamentals are also excellent with rising profits and rising ROE, and pays a 7.8@ dividend to boot!




A break and hold above 40 should see new territory...

(click to expand)


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## tinhat (9 October 2012)

Liftoff. Up 3c today. Still a good dividend yield too at 7%


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## tinhat (20 February 2013)

Since my last post I topped up on RCG as it is the only discretionary-consumer/fashion related retail stock in the SMSF.

Anyway, I decided to check out the Athletes Foot website on the weekend. It is now running the Magento e-commerce CMS as implemented by Netstarter.

http://www.theathletesfoot.com.au

I certainly was surprised at the quality of the design, the degree of technical problems in the site and just the overall implementation, quality of the copy and the architecture/structure of the site.

The site is slow to load and sometimes requests even time out. I did a traceroute and found that the site is located within Rackspace in the USA. The load times for me are sluggish this morning. Even though I notice that they use Akami for serving images (a service which supposedly speeds up worldwide performance of your website by caching content globally across their servers). If the site audience is primarily Australian then the best solution is to host it in an Australian data centre IMHO.

I wrote a long email to RCG's investor relations outlining my concerns about the website. I am really quite disappointed and concerned quite frankly that either inadequate resources have been allocated to their web presence or the process is being poorly managed.

I would encourage any other shareholders to take a look at the website and report any feedback you have to investor relations at RCG.


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## tinhat (25 February 2013)

I always find it interesting how companies handle their investor relations. I telephoned GZL a few weeks ago and the company secretary returned my call and we had a chat about - well, investor related stuff - the share buy-back scheme, the dividend, about the Gazal family's majority ownership. Very informative and pleasant.

RCG on the other hand - absolutely no response to my email. Not even a form reply - thanks for contacting us. I can't believe how bad the Athelete's Foot website is but apparently the management care as little about their investor relations as they do about the website.


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## Klogg (25 February 2013)

tinhat said:


> I always find it interesting how companies handle their investor relations. I telephoned GZL a few weeks ago and the company secretary returned my call and we had a chat about - well, investor related stuff - the share buy-back scheme, the dividend, about the Gazal family's majority ownership. Very informative and pleasant.
> 
> RCG on the other hand - absolutely no response to my email. Not even a form reply - thanks for contacting us. I can't believe how bad the Athelete's Foot website is but apparently the management care as little about their investor relations as they do about the website.




I've contacted RCG 3 times as a shareholder - twice they responded on the day, the third time took them about a week...  

As for TAF website, can't say I've ever had any issues, and I'm there a fair bit. The design isn't anything special, standard retail website with a lack of proper AJAX implementation for good UX, but still at the average level.
(The filtering on the left hand side did perform slowly for me though)

Nevertheless, the performs relatively well.


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## Klogg (21 August 2013)

From today's profit announcement:

- Consolidated Earnings Before Interest Tax and Depreciation (EBITDA) from continuing operations of $15.1m for the year ended 30 June 2013, an increase of 12.6% on the prior year
- Net Profit After Tax (NPAT) from continuing operations of $10.5m, an increase of 10.4% on the prior year
- Diluted Earnings Per Share (EPS) from continuing operations of 4.31 cents, an increase of 10% on the prior year

I can't believe they manage to increase profits by 10% (and aiming for that again this year) while maintaining a 90% payout ratio...
I guess that's why they have such a large cash balance.

Still, great performance by competent management.


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## Ves (21 August 2013)

Klogg, this has been a good pick since we discussed it twelve months ago.   It is pleasing to see that any of my concerns on their profitability / cash flow do not seem to be a problem (and hopefully for your sake it won't turn out that way!) if the current set of numbers are anything to go on.

I have do not hold and do not / did not have any intention of doing so, but nice to see others do well.


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## Ves (21 August 2013)

Updated figures



Ves said:


> Return on Revenue ratios - *(based on PBT / Rev)*
> 
> %
> *2013                                   29.18
> ...




Also Return on invested capital  (ex-intangibles) for last two years:

2013 - 52%
2012 - 46%

I have not adjusted for excess cash - so you could make an argument that these are even higher.

Pretty nifty set of accounts for this part of the cycle - biggest question as always is will there be a ROIC fade (which unfortunately a lot of retail chains face when they near the end their expansion) in the next few years? Not much evidence of it yet, I will admit. so perhaps they still have more expansion up their sleeves


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## Klogg (21 August 2013)

Ves said:


> Pretty nifty set of accounts for this part of the cycle - biggest question as always is will there be a ROIC fade (which unfortunately a lot of retail chains face when they near the end their expansion) in the next few years? Not much evidence of it yet, I will admit. so perhaps they still have more expansion up their sleeves




I have been watching their Return on Capital Employed and Return on Revenue quite closely (have the figures at home, not with me) and to be honest, I don't see any problems yet (I hope it continues that way). It seems that while TAF business is getting squeezed (like for like sales up 3%, EBITDA up 1.5% - although this could be from renovating stores), the RCG Brands business has a larger profit margin within it, which allows the company to maintain their RoCE/RoR.

If this is the case, it also explains their new agreement for Sperry Top‐Sider (agreement with Wolverine Worldwide, who also own Merrell). 

And thanks for your input Ves. Always good to have another view, incase I've overlooked something.


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## Klogg (21 August 2013)

Ves said:


> Updated figures
> 
> 
> 
> ...




Just to add to this - I've not included prior to 2008 in the mix, as this is when they sold off  King of Knives, which was a real drainer on the business. Since then the company has changed substantially, so their RoR at this point was of little relevance IMO.


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## tinhat (21 August 2013)

I can't believe I sold out of this good little income earner not long ago. What was I thinking? Will definitely get back in if an opportunity presents itself at some stage.


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## piggybank (26 November 2013)

Up six days in a row, or just over 20%..


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## Klogg (26 November 2013)

piggybank said:


> Up six days in a row, or just over 20%..




Not sure if you're interested, but RCG just purchased Podium sports (9 stores) + the distribution rights to Saucony for Australia and NZ. They bought this for about $2.9mil in cash and 8.9m shares (@ 68.5c each).

In the same announcement, they revised their earnings upwards from +10% to +15%, after taking into consideration any transaction fees.

Given how conservative RCG management usually are, I'm very confident in their forecast.
Furthermore, as a shareholder, I couldn't be happier that they were buying back shares in the 34-40c range, and now issuing shares given they are close to or at their 'full' value by my calculations.

My only mistake on this one was not buying more (140% capital gain since May + 15% in dividends [gross]), given how much cash I had at the time.


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## tinhat (2 June 2014)

So it's official. Joe Hockey has crashed the economy. Joe, I enjoyed having you as corporal of our section when I was an army cadet recruit but you are not up to running the economy.

Bought back in at $0.60. Will buy some more if the price drops further.


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## galumay (19 March 2015)

Acquisition and Capital Raising announced today, Accent Group who have the exclusive distribution of Skechers, Vans, Dr Martens, Timberland1, K Swiss, Palladium and Stance in Australia and New Zealand. Ownership and operation of the Platypus Shoes retail chain as well as a number of mono‐branded Skechers, Vans and Timberland stores in both Australia and New Zealand.

Details here, http://www.asx.com.au/asxpdf/20150319/pdf/42xcy9wb48f0yb.pdf

Looks like a good move on initial scan. 

I hold RCG in my SMSF


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## Klogg (19 March 2015)

galumay said:


> Looks like a good move on initial scan.




I've held this for some years now and management have only one black mark against them in my books (relating to "sophisticated investor" capital raising for Podium sports).

That said, I don't have enough confidence in them for an acquisition of this size. As you say, it looks like a good move, but if all acquisitions didn't look like a good move, why would they happen?

It just seems like they're using the increase in multiple (6*EBITDA to current market multiple) to justify the purchase. Furthermore, they haven't bothered to quantify any potential distribution benefits - and there must be a few.

Nevertheless, Hammerschlag owns a fair bit of RCG - and he's done very well to date as Chairman. Really needs more scrutiny before I can be happy with it.


On another note, I wonder if they'll structure the CR as a renouncable rights issue, rather than an opt in CR. It doesn't sound like it, but I'd very much prefer it. Gives me the option to sell off my rights, and optionality is king.


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## galumay (19 March 2015)

Klogg said:


> I've held this for some years now .....




All good points Klogg, like you I hold and I guess that just makes me more positive towards the annoucement than I might be if I didnt hold! I will top up on the CR and watch what happens. Seems like it will be a straight SPP rather than rights.


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## skc (19 March 2015)

This is a BIG deal for a compnay of RCG's size. RCG is only worth $193m market cap at the last price of 72c.

The positive is that the brand acquired are probably of higher calibre than RCG's existing portfolio. There will be synergies to be extracted and the increased scale of the company will attract more insto holdings.

The negative is obviously intergration risks, and perhaps a bit of stock overhang via the share placement to the vendors (assuming they are selling to get OUT of the shoe business).

The listed/unlisted earning multiple arbitrage is what it is, and the placement deal means the seller gets to enjoy the uplift as well.

It really is a merger of equal and it's a fault of the ASX that shareholders don't need to approve a deal of such magnitude.

The market should like it, regardless. My open price prediction = north of 80c.


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## Klogg (20 March 2015)

skc said:


> The negative is obviously intergration risks, and perhaps a bit of stock overhang via the share placement to the vendors (assuming they are selling to get OUT of the shoe business).



They're holding the shares in escrow for 2 years, and current management are joining RCG, so I'm not sure they're looking to get out entirely. But I guess over time, this may happen.




skc said:


> The market should like it, regardless. My open price prediction = north of 80c.



I would have thought the Cap Raising to instos and current shareholders at 70c would have put a cap on the price. But then again, I know nothing about short-term price movements.


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## Klogg (20 March 2015)

I've just gone over this in a lot more detail and am less opposed to the idea, simply because:
- there are no plans to extract synergies/cost reductions initially (minimal integration cost risk)
- Australian retail operations for AGL are growing extremely quick
- Wholesale operations for AGL have declined, but RCG management excel in this area

The only negative I hadn't seen earlier is that the Dr Martens and Timberland licenses expire at the end of this year. Unlikely they'll lose them, but it'd be a pretty big blow if they did.

Still some analysis to do, but at this point I'll participate in the SPP.


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## tinhat (20 March 2015)

Well, I can cancel the open buy order I've had in the market since 5/3/15 @ $0.70 as I will have an opportunity to pick up some more through the SPP. Whether I do or not is another matter. The figures provided look good.


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## rb250660 (23 March 2015)

Well this turned out to be a nice holding in my SMSF too. Cheering!


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## galumay (23 March 2015)

rb250660 said:


> Well this turned out to be a nice holding in my SMSF too. Cheering!




You took the words out of my mouth!


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## tinhat (19 May 2015)

Took profit today so that I can buy my allocation in the share purchase plan (hopefully I get to profit twice!). Wow, what a run. Do any value investors have a valuation for this company as a merged entity? Consensus target is currently $0.96


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## galumay (19 May 2015)

tinhat said:


> Took profit today so that I can buy my allocation in the share purchase plan (hopefully I get to profit twice!). Wow, what a run. Do any value investors have a valuation for this company as a merged entity? Consensus target is currently $0.96




I have a back of the envelope valuation range based on the financials released, its about $1.40. 

I have hung on and resisted the temptation to sell as I watched my initial investment double. Considered doing the same as you, but its hard not knowing what the scaleback will be.


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## tinhat (6 July 2015)

The way I understood the retail share purchase plan, I didn't realise it was subject to scale-back. So, I am disappointed that while being allowed to apply for up to $15,000 of shares (some 21,428 shares), I was only allocated 7,500.


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## galumay (7 July 2015)

tinhat said:


> The way I understood the retail share purchase plan, I didn't realise it was subject to scale-back. So, I am disappointed that while being allowed to apply for up to $15,000 of shares (some 21,428 shares), I was only allocated 7,500.




Yup, I was expecting a strong scale back, it was described in the notices, and once the price took off prior to the placement I suspected it would be heavily oversubscribed. Still, 7500 is better than a poke in the eye with a burnt stick!


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## galumay (24 February 2016)

Another very nice HY report, I haven't done a full analysis yet but I am thinking it backs my intrinsic value calculation of around $1.45. The best performer in my SMSF by a substantial margin. Pity we won't get a crack at the CR as its institutional & sophisticated investors only.


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## galumay (4 July 2016)

Up 25% on the back of theur takeover announcement, my first triple bagger in the SMSF, got in at 63c!


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## smallwolf (4 July 2016)

Yes it does seem like good news.... I got in about 78c in 2014.


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## So_Cynical (4 July 2016)

I added it to a buy list about 5 weeks ago after an online shoe purchase, thought it looked cheap.


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## Nortorious (4 July 2016)

Nice work on staying in this stock. I sold out about 12 weeks ago when it looked like it may turn downwards. It's not a clear breakout as yet but is looking good if it can edge slightly higher. The stop loss point is a little too far away for me to look at getting back into this one.

All the best with your holding!


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## NotWarrenBuffet (25 August 2016)

What the hell happened to the price of RCG today? Down 7.7% as I type despite the announcement of a record full year profit and increased dividend! Is the market spooked by the departure of CEO Michael Cooper? Is the market an ass? Is there something I'm missing?


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## luutzu (25 August 2016)

NotWarrenBuffet said:


> What the hell happened to the price of RCG today? Down 7.7% as I type despite the announcement of a record full year profit and increased dividend! Is the market spooked by the departure of CEO Michael Cooper? Is the market an ass? Is there something I'm missing?




Your question there assumes the previous market price were "reasonable" and fair. Hence, the good news today ought to hike it up.

It could be that those making the market was expecting more... or just did a typo.

Just saw a similar, but reverse, instance recently with MRM... news release show it just lost some work, earnings expected to be down and FY17 looks pretty bad. The price went down for half a day and then stabilised and head up some 15% in a week after.

So the market is an azz I wouldn't want to put money of it going either way short term.


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## skc (25 August 2016)

NotWarrenBuffet said:


> What the hell happened to the price of RCG today? Down 7.7% as I type despite the announcement of a record full year profit and increased dividend! Is the market spooked by the departure of CEO Michael Cooper? Is the market an ass? Is there something I'm missing?




I haven't the time to looked too carefully but on first glance the reports were in line with expectations. 

So yes a CEO departure can certainly cause short term price weakness.

BLA announced retirement of it's founding CEO 4 days ago and was marked down 15% on it's benign report. It's now pretty much back to where it was before that.

Take it as the market's acknowledgement to the good work by the departing CEO... the harder it fall, the stronger the acknowledgement!

P.S. That's not to say there isn't something negative in the report that I haven't seen yet.


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## galumay (25 August 2016)

There is a bit of negative stuff in there, nothing to justify the price drop though IMO, i guess RCG has had a terrific run up over the last 12 months and sometimes Mr Market does that to a company's share price. I have seen it quite a bit in my holdings this season, some that had really good reports being smashed and others that reported nothing special but took off.

I dont think it will take RCG to recover the lost ground - allthough like you I havent fully analysed the report or entered the data in my spreadsheet.


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## NotWarrenBuffet (25 August 2016)

Thanks for your thoughts, dudes. RCG certainly took a big whack today. Down 10.57% at day's end, compared to the All Ords which was down only 0.39%. The MACD is still looking good, though.


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## NotWarrenBuffet (27 August 2016)

WAM's Chris Stott on RCG's share price plunge this past week:

"On Thursday, footwear retailer RCG Corporation (ASX: RCG) reported its full year results, with underlying FY16 earnings before interest, tax, depreciation and amortisation (EBITDA) of $60.4 million, in line with the company’s July market update. Shares in RCG fell following the announcement and closed down 9.7% for the week on the back of slower than expected start to FY17 trading."


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## galumay (27 August 2016)

NotWarrenBuffet said:


> WAM's Chris Stott on RCG's share price plunge this past week:
> 
> ...




I reckon the price makes it very attractive for someone wanting to enter or build an existing positition. Thanks again to the irrational Mr Market!


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## rnr (10 April 2017)

Having lost some 48% of its share price since the high in July 2016, is a reversal now imminent for RCG Corp?


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## Knobby22 (10 April 2017)

rnr said:


> View attachment 70658
> 
> 
> Having lost some 48% of its share price since the high in July 2016, is a reversal now imminent for RCG Corp?



Maybe.
But if it gets through $1 then 80c is where it will go to. Too risky for me.


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## Wyatt (10 April 2017)

Bottom pickers/mean reverters must be in a frenzy over this one. Friday, biggest volume day since 2010, so a major change of ownership, 6% Divie F/F. SOL in. Near major support?
Recent 6% downgrade in FY17 outlook has hurt confidence, otherwise rapidly increasing profits, anyone buying?
No position held


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## Knobby22 (10 April 2017)

Don't forget headwinds.
Amazon entering market this year. This is probably a cause of the sentiment.


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## Knobby22 (10 April 2017)

Taken off. Will it last?.


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## Wyatt (10 April 2017)

Good point Knobby22, Amazon is the future of online shopping, but do people buy shoes online? Sure I have looked at buying shoes online myself, but I wanted to replace what I already had, so no worry about comfort etc, but what % of shoppers are replacing an item and what % are adding to their collection?

I wonder who bought /sold recently


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## galumay (10 April 2017)

I agree that the sentiment around retailers and Amazon is part of the story. I think its unwarranted, especially for things like shoes.

I also think the price ran well ahead of value so the re-rate was stronger than it might otherwise have been.


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## So_Cynical (10 April 2017)

Wyatt said:


> *Bottom pickers*/mean reverters must be in a frenzy over this one.




No, no frenzy here - retail sucks

I mean the disruption just get bigger, retail shops are in a death spiral, clothing, cheap crap (TRS), electronics, everything, its a race to destruction.



Wyatt said:


> Good point Knobby22, Amazon is the future of online shopping, but do people buy shoes online?




Yes they do, it costs nothing to send them back, total refund no questions asked.


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## galumay (11 April 2017)

So_Cynical said:


> I mean the disruption just get bigger, retail shops are in a death spiral, clothing, cheap crap (TRS), electronics, everything, its a race to destruction.




Honestly, I think thats a bit melodramatic. Sure there is some adjustment in process, but there is no sign of bricks and mortar shopping disappearing or its "destruction". No retail sales figures support that sort of change, nor does the anectdotal evidence of visiting packed shopping centers! 

While the growth or online shopping will have some overlap with declines in retail shops there is also organic growth for online. It seems most plausible to me that both forms of retail have their place and will happily continue to co-exist.



So_Cynical said:


> Yes they do, it costs nothing to send them back, total refund no questions asked.




Some people will, but shoes are actually a good example of something most people are unwilling to buy online - and the need to put the shoes on to feel how they fit is the biggest reason. Even if free returns and total refund were offered that wouldnt sway most people to purchase shoes online.

It seems to me there is an increasing liklihood that the supposed 'disrupters' dont really have nearly as much long term impact as the popularist press would have us believe. They tend to end up just being another way of doing things. There is an awful lot of capital that has flowed into incredibly unprofitable 'disrupters' on the back of this fad!


----------



## skc (11 April 2017)

galumay said:


> Honestly, I think thats a bit melodramatic. Sure there is some adjustment in process, but there is no sign of bricks and mortar shopping disappearing or its "destruction". No retail sales figures support that sort of change, nor does the anectdotal evidence of visiting packed shopping centers!
> 
> While the growth or online shopping will have some overlap with declines in retail shops there is also organic growth for online. It seems most plausible to me that both forms of retail have their place and will happily continue to co-exist.





I think traditional retail will continue to evolve. Shopping malls will stay packed, but the thriving retailers will be those who offer experiences, unique products and impulse satisfaction. There may also be more hybrid "bricks and mortar showroom" + online backend type businesses...



galumay said:


> Some people will, but shoes are actually a good example of something *most people *are unwilling to buy online - and the need to put the shoes on to feel how they fit is the biggest reason. Even if free returns and total refund were offered that wouldnt sway *most people *to purchase shoes online.




My wife's expense on shoes will easily be 10x that of mine... and she buys shoes online. The real answer to "How many people will buy shoes online today and in the future?" is probably difficult to extrapolate from personal experience/anecdote. But if you have seen a research/survey/hard figures or something... feel free to share them.

The problem with shoe shops is that it has an expensive service model. A potential customer walks into the shop, try on 4 different pairs, then try 3 sizes on the preferred pair, then decided to have a think over lunch, when she browsed online and found the same shoe 15% cheaper. Meanwhile, the shop has incurred 1/2 hour cost of a shop assistant and 2 missed sales. It's a tough gig!



galumay said:


> It seems to me there is an increasing liklihood that the supposed 'disrupters' dont really have nearly as much long term impact as the popularist press would have us believe. They tend to end up just being another way of doing things. There is an awful lot of capital that has flowed into incredibly unprofitable 'disrupters' on the back of this fad!




I remember calling the death of department stores 10 years ago, but in truth the US stores are starting to die out only now.

Having said all that... I don't know RCG's weakness is really attributed to the threat of Amazon. It has reported weaker sales growth and other retailers have generally been somewhere between weak (JBH, SUL, HVN) to smashed (TRS, ADH, ORL). Perhaps the threat of rising mortgage rates on discretionary spending is a much more imminent headwind.


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## Ves (11 April 2017)

skc said:


> Having said all that... I don't know RCG's weakness is really attributed to the threat of Amazon. It has reported weaker sales growth and other retailers have generally been somewhere between weak (JBH, SUL, HVN) to smashed (TRS, ADH, ORL). Perhaps the threat of rising mortgage rates on discretionary spending is a much more imminent headwind.



I think this is more close to the current narrative.

Retail is a pretty tough gig when discretionary spending grinds to a halt. I think private debt to GDP is growing but surely it cannot rise at the current rate forever.  How much does that affect private spending when it does?

The off-balance sheet liabilities like lease commitments are something I'd really keep an eye on  and arguably this is where online retailers really get a free-kick -  the only space they need to pay for is their headquarters and their distribution centres.  For a retailer with physical shop space you have to make lease repayments regardless of how many people are coming into your stores.  If there is a bad recession and stores in marginal areas need to close how much is the ongoing lease liability in the worst case scenario?

Net debt is also $50m (not sure how seasonal the cash is so it could be a bit more).  I'm not sure how recession proof that is either, but I assume discretionary retailers would ideally operate with little to no debt when times get tough to provide funding flexibility.

It's pretty hard to get a feel for what happens in bad times in Australia because most of these businesses,  outside of the GFC blip,  really haven't faced massive amounts of economic duress.


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## skc (11 April 2017)

Ves said:


> The off-balance sheet liabilities like lease commitments are something I'd really keep an eye on  and arguably this is where online retailers really get a free-kick -  the only space they need to pay for is their headquarters and their distribution centres.  For a retailer with physical shop space you have to make lease repayments regardless of how many people are coming into your stores.  If there is a bad recession and stores in marginal areas need to close how much is the ongoing lease liability in the worst case scenario?




Stupid question... do retail lease work like residential lease when it comes to breaking the lease? If another business wants to use the space vacated and make the lease payments, does that mean the previous lease holder is off the hook?



Ves said:


> Net debt is also $50m (not sure how seasonal the cash is so it could be a bit more).  I'm not sure how recession proof that is either, but I assume discretionary retailers would ideally operate with little to no debt when times get tough to provide funding flexibility.




By no means drawing a comparison... but from memory DickSmith had no net debt 12 months before it's collapse.


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## Ves (11 April 2017)

skc said:


> Stupid question... do retail lease work like residential lease when it comes to breaking the lease? If another business wants to use the space vacated and make the lease payments, does that mean the previous lease holder is off the hook?



I believe you can in most cases but it depends on the lease and the circumstances.   Obviously you also need to find a new tenant and if your own business is struggling is the chance of this very high?

Here is a pretty basic guide outlining some of the issues.

https://www.bartier.com.au/insights/subleases-what-you-should-know-as-a-head-tenant/

It sounds like this could get pretty complicated from a legal side.  I don't think by inserting a sub-tenant you necessarily walk away from your responsibilities.



> By no means drawing a comparison... but from memory DickSmith had no net debt 12 months before it's collapse.



Indeed, that is why discretionary retailers generally have conservative balance sheets because their working capital and cash cycles can become onerous very quickly if they are struggling. Retailers technically can be profitable (in an accounting sense) and still fail.


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## galumay (11 April 2017)

skc said:


> Stupid question... do retail lease work like residential lease when it comes to breaking the lease? If another business wants to use the space vacated and make the lease payments, does that mean the previous lease holder is off the hook?




In my experience of commercial leases, if you break the lease you will have to pay out the balance of the lease for the contracted period - something that rarely happens in residential leases. Generally sub-letting is not allowed.


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## So_Cynical (12 April 2017)

galumay said:


> Honestly, I think thats a bit melodramatic. Sure there is some adjustment in process, but there is no sign of bricks and mortar shopping disappearing or its "destruction".




Yeah sure a little dramatic, but where is the compelling investment case for retail? whats the driver to make people turn away from online and back to the shops? - there isn't one. The shopping centers are full, but spend some time looking at who is buying and what they are buying, the majority of specialist retailers are struggling.

There are other stocks and sectors that are not undergoing massive disruption, less risk.


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## galumay (12 April 2017)

So_Cynical said:


> Yeah sure a little dramatic, but where is the compelling investment case for retail?




Same as always, well run businesses, with good management and continuing growth. Maybe you have to look a little harder with consumer sentiment currently, but I dont think there is nearly as much 'disruption' as some would have us believe.

Other sectors have different hazards, its the nature of the game! 

Personally I dont worry too much about that sort of macro economic, crystal ball gazing. Its not so long ago the same 'experts' were writing off the mining and mining services sector, no one was predicting the turn around we have seen in the last 6 months or so. 

None the less, your strong viewpoint on retail has made me revisit my analysis for the retailers that I hold and consider how well positioned they are to face the challenges of low growth and growing online competition. That is one of the advantages of the variety of opinions on ASF, it helps inform ones decision making process and encourages challenging my biases!

In the case of RCG I do feel that shoes are much less at risk of loss of market share to online retail and are also less discretionary than a lot of other retail products. Financially it has been a good business for my SMSF, delivering nearly 100% increase in SP and gross dividends of nearly 25% in the 2 years I have held - it would need to be a compelling case to make me think my money would be better somewhere else!


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## Klogg (18 April 2017)

galumay said:


> Same as always, well run businesses, with good management and continuing growth. Maybe you have to look a little harder with consumer sentiment currently, but I dont think there is nearly as much 'disruption' as some would have us believe.
> 
> Other sectors have different hazards, its the nature of the game!
> 
> ...




I bought this in '09, sold just after the Accent Group acquisition. Management are definitely talented, but don't forget this is not the company it used to be.
Their Wholesaling division had a currency tailwind (stronger AUD, helping with imports), and they had net cash. Further, the TAF business is largely a franchise model, so they just take a percentage of revenue, with minimal downside risk (e.g. no capital at risk).

Now, they have a significant debt load for a retailer, and any benefits from currency are reversing (not that I'm forecasting AUDUSD rates, only stating what has happened to date).


Having looked into it, I don't think one should expect higher sales from store maturity as you would in say a furniture retailer (Nick Scali as an example), especially from something like HypeDC. Simply witness the opening of a HypeDC store, which usually coincides with the release of some form of limited edition shoes, and you can see the 100 person queue to buy some ridiculously overpriced Nike invention (or similar)

As for Accent Group, it's is still doing very, very nicely, and would be the basis for any purchase I make in this company. 20% LFL (targeted 7% for the year) plus increasing GP margins make it attractive.


_"Financially it has been a good business for my SMSF, delivering nearly 100% increase in SP and gross dividends of nearly 25% in the 2 years I have held"_
If the business valuation hasn't moved in line with the SP increase (100% in 2 years is a big ask), then this is an argument against holding, all else being equal.


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## galumay (18 April 2017)

Klogg said:


> If the business valuation hasn't moved in line with the SP increase (100% in 2 years is a big ask), then this is an argument against holding, all else being equal.




Thanks for the indepth analysis Klogg, great reading as always. My range of valuation for RCG last year was around $1:30-40 so I was comfortable continuing to hold in the light of your comment I have quoted. I did give it some more thought when they ran all the way to $1:80 or so, in hindsight that was a good exit point on the basis of being over valued by the market.

In the end I decided to hold because although it was considerably higher than my range of valuation, I am always reluctant to sell down my holdings unless I am very confident there is a compelling argument for a new home for the capital. I am still finding that decisions about timing of selling are much more difficult than decisions about timing of buying!


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## Knobby22 (18 April 2017)

galumay said:


> I am still finding that decisions about timing of selling are much more difficult than decisions about timing of buying!




it is hard. it has taken me years to get average at it.
Market is going to be up today it appears so it looks like that $1 will hold again.
I would want to buy lower but it may not happen.


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## tinhat (18 April 2017)

I don't hold this stock ATM but it's been on my radar for a potential re-entry. Check out that gap between $0.92 and $0.80. This has been a fairly volatile stock over the years and provided some good opportunities for a trade when it was on the way up.


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## Klogg (18 April 2017)

Waiting for the speeding ticket...


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## Knobby22 (18 April 2017)

Yes! knew it would collapse if it went through $1. Let's see what happens tomorrow. Might hold then.


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## Triathlete (19 April 2017)

Let us see if $0.88 will be the low...a few months of accumulation here might be good......


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## Muschu (21 April 2017)

So 89 c today... I just started watching this one... Record profit announced in Feb with increased dividend and a SP decline since?  I have read most of the discussion above.  Any further thoughts?


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## Triathlete (21 April 2017)

Muschu said:


> So 89 c today... I just started watching this one... Record profit announced in Feb with increased dividend and a SP decline since?  I have read most of the discussion above.  Any further thoughts?




The stock has fallen through two of the strongest levels in Technical Analysis which are the 50% level of the all time high at $0.9675 and the 50% level of the all time range at $1.1225  so this indicates that the stock is weak....We can now see that there is support going back about 3 years at $0.88 which is where the stock is currently holding

Should the stock not hold this level here at $0.88 and accumulate......then a move to $0.70 is on the cards in my opinion so another 20% drop........Time will tell though....


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## galumay (21 April 2017)

To put the FA view, RCG is now strongly undervalued by any metrics I use. It looks like a classic misspricing by the market and if I had spare cash lying around I would be very happy to invest at current prices. I suspect negative sentiment is being driven by the belief that Amazon will be a genuine disrupter in the retail space, but there must be some other drivers for RCG as the drop in price is disproportional compared to others in the sector one would expect to be more heavily impacted.

Unless there is some significant bad news not in the public domain I would expect the gap between value and price to close quickly as future results continue to show the strength of RGC as a business.


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## Muschu (21 April 2017)

Thank you both for the comments.... Interesting grist for the mill


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## Triathlete (22 April 2017)

I have updated my RCG chart based also on the latest Fundamentals from Lincoln stock doctor...www.lincolnindicators.com.au............. 14 day free trial.

*Monthly Chart:









Strategic comment.*

Last Updated: 22 March 2017

The directors of HYPE DC announced their resignation as Co-CEO on 17 March 2017, with Daniel Gilbert set to remain as a non-executive director of RCG. Whilst this news came as a surprise, we are aware the resignation is on amicable terms with no suggestion of animosity between the current management team.

Regarding competitive pressures, namely Amazon, management believes the impact will be less so when compared to consumer electronic retailers like JBH and HVN. As RCG retains exclusive distribution license for various brands in the current portfolio, we believe it is well positioned to maintain a competitive moat given Amazon would still need to deal via RCG for these products.

RCG is a Star Growth Stock and Star Income Stock that suits both growth and income orientated investors looking for capital appreciation and stable distributions.

The company produced a 1H17 result that was hard to fault. Management delivered robust top line growth with strength demonstrated across most of the company's business segments. This should provide a solid foundation for further growth in FY17; even in light of a revised FY17 guidance for between $85m and $88m EBITDA.

Investors should be aware that the footwear retail market is closely tied to consumer sentiment and thus any changes to the latter could have a material impact on future sales. This risk is somewhat mitigated by RCG's premium service offering which is a point of difference from competitors in the same space.


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## So_Cynical (23 April 2017)

American retailers are closing stores at a record pace this year as they feel the fallout from decades of overbuilding and the rise of online shopping.

https://www.wsj.com/articles/brick-...uttering-at-a-record-pace-1492818818?mod=e2fb

What happened to the quote tags???


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## galumay (23 April 2017)

So_Cynical said:


> What happened to the quote tags???




Not sure what you are asking? BTW the WSJ story is paywalled.


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## So_Cynical (23 April 2017)

galumay said:


> Not sure what you are asking? BTW the WSJ story is paywalled.




There used to be a quote button on the menu bar when posting - on the old forum.
-
WSJ story is about US bricks and mortar retailers closing at a record pace, greater than the GFC, a couple of them closing all stores and shifting to 100% online.


So_Cynical said:


> *retail shops are in a death spiral*, clothing, cheap crap (TRS), electronics, everything, its a race to destruction.




In ten years time malls will be full of service centers, gyms and child care, holistic health and online order pick up places .


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## skc (23 April 2017)

So_Cynical said:


> What happened to the quote tags???




The quotes tags are under the "+" button (between "Media" and "Save Draft").

The syntax is still the same [QUOTE ][ /QUOTE]"



So_Cynical said:


> In ten years time malls will be full of service centers, gyms and child care, holistic health and online order pick up places .




And show rooms / fitting rooms for products to be bought online.


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## skc (23 April 2017)

galumay said:


> Unless there is some significant bad news not in the public domain I would expect the gap between value and price to close quickly as future results continue to show the strength of RGC as a business.




I don't know if there is significant bad news not in the public domain, but I think RCG is the kind of company that an astute institutional investor can gain an edge on the market by doing some of the following:
- Observe physical store activity - looking at foot traffic, staff numbers, store deliveries etc
- Observe and compare online presence (against competitors) - website hits, social media trends etc
- Conduct price checks, analyse sale frequency, marketing spend etc
- Conduct casual interviews with company/store manager/sales/suppliers/logistics providers/competitors etc

Some can be done via primary research and others may have secondary sources. 

I think some brokers do some of the above on the bigger retailers - things like grocery prices are closely monitored - but RCG is probably a bit too small to attract wide coverage. Nonetheless, it's a popular stock last year for small cap managers and may be one or two institutions decide to conduct some deep investigations. 

Then again, simple answer like "It's grossly mispriced" could easily be the most logical and ultimately correct answer.


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## galumay (24 April 2017)

skc said:


> Some can be done via primary research and others may have secondary sources.




Given that my nearest shoe shop of any type is about 800km away, and the road is closed due to the wet, I will have to look to secondary sources!


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## skc (24 April 2017)

galumay said:


> Given that my nearest shoe shop of any type is about 800km away, and the road is closed due to the wet, I will have to look to secondary sources!




But I would walk five hundred miles 
And I would walk five hundred more 
Just to do my research on RCG 
So I know what their sales are like
Da lat da (Da lat da), da lat da (Da lat da)
Da-da-da dun-diddle un-diddle un-diddle uh da-da
Da lat da (Da lat da), da lat da (Da lat da)
Da-da-da dun-diddle un-diddle un-diddle uh da-da


----------



## galumay (24 April 2017)

skc said:


> But I would walk five hundred miles
> And I would walk five hundred more




Look, I would walk 500 miles, and even 500 more, but I draw the line at swimming across those flooded, croc infested, rivers! No business, even RCG is worth that!


----------



## Knobby22 (27 April 2017)

OK, I'm in at 88c.
Just looks oversold to me. Probably sell at around $1.30 in 5 months if it all works out.


----------



## VSntchr (27 April 2017)

Ausbill has an approx 4.3% weighting in RCG. The departure of the lead managers there could result in portfolio rebalancing/culling. Just something to keep in mind as it could explain an otherwise "random" move.


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## Knobby22 (1 May 2017)

Jeez, the shorters are having a field day! Ouch.


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## McLovin (1 May 2017)

Not often you see a company commenting on its share price! Amazon is really spooking retail at the moment.


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## notting (1 May 2017)

skc said:


> I remember calling the death of department stores 10 years ago, but in truth the US stores are starting to die out only now.





Well you got that right.  You weren't even early. Apart from Apple stores. It's been a slow death.


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## skc (1 May 2017)

McLovin said:


> Not often you see a company commenting on its share price! Amazon is really spooking retail at the moment.




It was a lol moment for me. In order to defend the share price move, they outlined all the reasons (completely rational ones) to sell the stock. It reminded me of this (from 00:53)


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## So_Cynical (1 May 2017)

27% one day fall - one for the ASX shockers thread now.
--
Signed up for the Linclon stock doctor 14 day free trail today.

RGC was a Star Growth Stock & Star Income Stock yesterday  today the stars are shaded out and the stock is under review pending closer analysis of today's market update...like im going to pay $1600 per year for rear view mirror stuff.


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## Triathlete (1 May 2017)

Triathlete said:


> Should the stock not hold this level here at $0.88 and accumulate......then a move to $0.70 is on the cards in my opinion so another 20% drop........Time will tell though....




I guess today for RCG is a good example of.. "not trying to catch a falling Knife".
39 weeks in a downtrend

This is a good time to go back and look at the RCG chart to see how it is playing out.

I was hoping that the $0.88 level would hold as my chart analysis had shown *but hoping is not a word* I like to use in trading and we need good analysis to back up our reasons for entering a trade.

If we look at the monthly chart below we can see that we were still in a downtrend and could not confirm whether the "Wave C" had completed, it was only at the minimum price level for a C wave by my calculations so a further leg down was possible unless we could confirm a change in trend.

At this point no buy signal had been given to enter this stock long at least from a trading point of view and was only on a watch list for now.

Even though the Fundamentals looked good at this time the chart was not supporting that view , this was also a reason not to enter too early and to wait for confirmation.

A  trading rule I like to use is.

Never trade against the direction of the next highest time frame as this will also keep you from getting into trades too early, as even though it can cost you money it will save you a lot more in the long term if you have got the timing / entry signal wrong.

It does not matter if you miss out on the first 10% of a move as long as you can pick up the next 80%..we can leave the first 10% and last 10% for the speculators......




Triathlete said:


> Monthly Chart:




 RCG was still showing that the down move had not yet completed....If you open up your own weekly chart you can also see that the downtrend was still in progress and we had no reason to get in early......Patience is everything..!!


----------



## Triathlete (1 May 2017)

So_Cynical said:


> 27% one day fall - one for the ASX shockers thread now.
> --
> Signed up for the Linclon stock doctor 14 day free trail today.
> 
> RGC was a Star Growth Stock & Star Income Stock yesterday  today the stars are shaded out and the stock is under review pending closer analysis of today's market update...like im going to pay $1600 per year for rear view mirror stuff.





You are exactly right...that is why I never trade unless the chart supports the fundamentals which for this stock they were not...


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## skc (1 May 2017)

Triathlete said:


> You are exactly right...that is why I never trade unless the chart supports the fundamentals which for this stock they were not...




The fundamentals supported the chart... some just got the wrong fundamentals.


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## galumay (1 May 2017)

skc said:


> The fundamentals supported the chart...




I know I completely dimiss anything to do with charts, but just for interests sake, what fundamentals do you think support this sort of fall in the share price?


----------



## skc (1 May 2017)

galumay said:


> I know I completely dimiss anything to do with charts, but just for interests sake, what fundamentals do you think support this sort of fall in the share price?




Looking at the price chart, the price fall from $1.80 to 60c is some *66%*, while the change in profit expectation was only reduced from EBITDA of $90m (Aug 2016 per full year result) to $77m (mid-point of range offered today), or a *15% fall*. So yes on the surface it appears that the price fall has far exceeded the actual deterioration in performance.

Obviously the change in NPAT forecasted is more pronounced, given the fixed nature of the D&A and I terms. Assuming a D&A and I of $25m for the full year (roughly double half year figure) and 30% tax rate, NPAT has fallen from $45.5m to $36.4m, or a *20% fall*.

Looking at the next layer... H1 NPAT was $21.2m, so management original expected H2 NPAT of ~$24.3m, or a growth of 15% on H1. Now H2 is looking like $15.2m, or a fall of 28%. That is a fall of *37% in H2* - a major and rapid deterioration.

Then there's clearly a market re-rate when a company downgrades profits twice in 3 months. Back in Aug 2016, RCG had a market cap of $975m against a NPAT of $45.5m, traded at PE 21x. Today, with market cap of $328m and NPAT(e) of $36.4m, it trades at PE 9x. But that's assuming the profit falls no further. A pessimistic analyst might use the downgraded H2 performance and look for low $30m's in NPAT on an annualised basis. In which case RCG trades at ~10-11x multiple which is low but not crazily so. 

If the average retail sector had a PE of 14-15 (sorry don't have the exact figure offhand), then arguably, RCG got de-rated from *trading at ~50% premium to ~30-50% discount. *I don't think this discount is excessive (it's no more excessive than when things looked rosy) given that the deterioration all happened within one reporting period after a major acquisition, in the backdrop of a tough retail environment. The market is right to discount it until the company can prove itself that operations can be turned around. 

If this period turns out to be temporary then the current price is certainly "cheap". But the market isn't about to give RCG benefit of the doubt given what transpired. We have all seen this movie before, we just don't know whether the ending is DSH or LOV. I don't have a good insight on RCG's balance sheet, but it seems to have $110m of shoes supported by $100m of debt. If the price falls further it'd indicate that the market is concerned with the balance sheet, which warrants an even lower PE multiple.

I am happy to accept if you think some of what I am saying isn't true and pure "fundamentals".... but my definition of fundamentals is simply anything other than the price (and volume) chart. So in my opinion the fundamentals and current price (and the price actions leading to today) are not completely disjointed.


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## So_Cynical (2 May 2017)

galumay said:


> I know I completely dimiss anything to do with charts, but just for interests sake, what fundamentals do you think support this sort of fall in the share price?




Its sentiment and weight of shorts and today's ann, hard to spin the ann as neutral or just a blip..retail is in a death spiral, ala Media.


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## Triathlete (2 May 2017)

So_Cynical said:


> 27% one day fall - one for the ASX shockers thread now.
> --
> Signed up for the Linclon stock doctor 14 day free trail today.
> 
> RGC was a Star Growth Stock & Star Income Stock yesterday  today the stars are shaded out and the stock is under review pending closer analysis of today's market update...like im going to pay $1600 per year for rear view mirror stuff.





I see that it is still a Star growth and Star income stock after their further analysis today.

Their valuation is now $0.98 and the consensus valuation is at $1.51 so plenty of value if they have it right.


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## galumay (2 May 2017)

skc said:


> .....
> I am happy to accept if you think some of what I am saying isn't true and pure "fundamentals".... but my definition of fundamentals is simply anything other than the price (and volume) chart. So in my opinion the fundamentals and current price (and the price actions leading to today) are not completely disjointed.




Thanks for such a detailed reply skc. I was out fishing for the day yesterday so hadnt read the latest release in detail. I dont disagree with the gist of what you are saying. I will have to go back and rerun my valuations for RCG, given that they have fallen back well below the last range of IV I calculated. 

At least we caught some nice fish!


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## Tightwad (2 May 2017)

better catching fish than falling knives.


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## galumay (2 May 2017)

Oh I dont know, catching falling knives has been one of the most profitable areas of my investing! There is a knack to it, but buying partial ownership of a business at a discount to its intrinsic value is better the bigger the discount!

Mind you I have some scars, SGH being the sharpest and biggest knife!


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## Tightwad (2 May 2017)

yeah i made a hash of rcg, bought hsn about right though.  how much discount do you look for?


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## craft (3 May 2017)

skc said:


> I don't have a good insight on RCG's balance sheet, but it seems to have $110m of shoes supported by $100m of debt. If the price falls further it'd indicate that the market is concerned with the balance sheet, which warrants an even lower PE multiple.




Perhaps looming larger than the balance sheet itself is the notes to the balance sheet and in particular future lease commitments. I think RCG is now pushing 300 Million in this regard.  Ultimately if Amazon/online does have a real impact and shop front retail is in for an across the board paradigm shift then land lords are going to get it in the neck but until leases can be renegotiated down in line with earnings it could be a nasty squeeze for retailers.

Of course if your retail offering just isn't up to scratch against other retailers then you can't look forward to eventually reduced rents because competition will keep them high - that's not a problem with Amazon/online changing the retail landscape - that's a problem with your business offering.

No insights into RCG - I haven't looked into them much yet.


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## Muschu (3 May 2017)

Triathlete said:


> I see that it is still a Star growth and Star income stock after their further analysis today.
> 
> Their valuation is now $0.98 and the consensus valuation is at $1.51 so plenty of value if they have it right.




i have this 2 week trial... Weird... No plan to subscribe and never had one... Bought at 89c and hanging on... Loose bait on a long hook


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## galumay (4 May 2017)

I have a lot to digest with the RCG story, i bought in first at 62c in 2014 and added at 70c in the SPP in 2015, my calculated range of IV for it by late 2015 was $1.35-$1.45. It ran all the way to around $1.90 from memory and became the first multibagger in my SMSF and the best performer overall.

I have yet to form any firm opinion about the path forward from here, I will have to spend some time digesting the impact on the business and what it might mean for the future.


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## Klogg (4 May 2017)

galumay said:


> I have a lot to digest with the RCG story, i bought in first at 62c in 2014 and added at 70c in the SPP in 2015, my calculated range of IV for it by late 2015 was $1.35-$1.45. It ran all the way to around $1.90 from memory and became the first multibagger in my SMSF and the best performer overall.
> 
> I have yet to form any firm opinion about the path forward from here, I will have to spend some time digesting the impact on the business and what it might mean for the future.




Every time I try and understand retail, I just get more confused.

My first purchase of RCG was under ten times earnings with a large net cash position, so it was very conservative. I was lucky even then, because bad choice on inventory and obsolescence whittles away your cash balance.

Unless opportunity slaps me in the face and I get the business extremely cheap, I won't really be touching retail.


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## galumay (4 May 2017)

Klogg said:


> Every time I try and understand retail, I just get more confused.




Well thats a consolation! If someone so much more experienced and knowledgable than me is confused then I feel better about my confusion!!


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## Klogg (4 May 2017)

galumay said:


> Well thats a consolation! *If someone so much more experienced and knowledgable than me *is confused then I feel better about my confusion!!




Some of my recent decisions seriously contradict the bolded part...


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## Tightwad (4 May 2017)

even the more knowledgable have been caught on this, ausbil microcap being one (amongst other retail stocks), now the managers have suddenly decided they need to leave and manage their family finances.


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## tinhat (7 June 2017)

I'm still keeping my eye on RCG. The one thing that has never impressed them with me are their websites. Compare RCGs Hype DC to their competitor JD Sports. All the models in the fashion shots have half their heads cut off - WTF?. Their Platypus shoes site template is very similar to Hype DC. In fact most of the RCG brand websites are too generic and commoditized shoes. Too many shots of shoes on the home pages and not enough brand personality. All these sites are more or less selling the same sneakers but the JD Sports site is a lot more targeted to the personality of the target market.

As for The Athlete's Foot, I've never been impressed with that website.


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## Tightwad (7 June 2017)

yep the Athletes Foot site is very plain, it's fine for me but it's not what you'd call engaging.  the blog section is a slight improvement.


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## galumay (28 August 2017)

What looks to be a good AR released today, I havent had time to fully digest it yet, but overall it looks like they have bedded down the acquisitions and seeing some good growth. What caught my eye was the 79% growth in online sales - off a low base, but impressive none the less.

The strategy for online sales is also clearly driven by looking at what others like Amazon have done. This is one of the problems for disrupters like Amazon, the low hanging fruit at the start of disruption is easy - no one realises whats going on. Down the track though competitors learn from the disrupter and copy their business model - with some advantage from being already embedded in the market.


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## galumay (27 November 2017)

Nice jump of 12% or so for RCG today, due to an off market sale at a premium of 20% to the previous close. Lovely to see the shorters bleeding out of their orifices!! A timely reminder to those who believe shorters have a special insight into businesses, they get it wrong just as often as those of us that go long.


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## System (29 November 2017)

On November 29th, 2017, RCG Corporation Limited (RCG) changed its name and ASX code to Accent Group Limited (AX1).


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## tinhat (15 December 2017)

I'm back in today. The stock has "jumped the creek" and my timing is based on a hunch that, now that it has closed the gap, it is going to get support around the 30 week moving average. In terms of fundamentals they have good brands, good management, good track record and my expectation is that the dividend is sustainable.


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## galumay (23 February 2018)

BOOM! What a HY report, revenue and profit up 20% on PRP, share price up 25% in early trading. I hummed and hahed about selling out of AX1 at one stage this year, but decided all the noise around disruption in retail was overdone. The continuing growth in online sales is especially impressive. (although the 179% growth is a little misleading because being a HY report its comparing PRP.)


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## Boggo (15 March 2018)

Seems to be heading in the right direction. (I do hold).


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## stevo2 (18 March 2018)

I subscribe to a service which reports on "financial health". They like them.


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## galumay (21 March 2018)

I see AX1 hit a 12 month high of $1.25 today, that means its once again run a fair way ahead of my range of calculated value. It takes some pretty heady growth to support this sort of SP in any of my modelling. I think the optimism coming out of the HY results is a bit OTT. The fact that the PRP was pretty poor made the figures look better than they really were.

I am thinking I might sell out of AX1, its a double bagger at that price for me and I think it could drop pretty fast and hard with anything but the most positive of news going forward.


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## Miner (22 March 2018)

galumay said:


> I see AX1 hit a 12 month high of $1.25 today, that means its once again run a fair way ahead of my range of calculated value. It takes some pretty heady growth to support this sort of SP in any of my modelling. I think the optimism coming out of the HY results is a bit OTT. The fact that the PRP was pretty poor made the figures look better than they really were.
> 
> I am thinking I might sell out of AX1, its a double bagger at that price for me and I think it could drop pretty fast and hard with anything but the most positive of news going forward.



Galumay

If you recall how RCG fared badly and every Tom Dick and Harry was doubting on RCG. Then takeover came and AX1 came to limelight. I am more hopeful on AX1 than I was on RCG though held them well.


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## galumay (22 March 2018)

Hey Miner, it wasnt really a takeover, RCG bought Hype and a couple of others and then decided to change their name to Accent Group (AX1). No doubt the business was sold down, the shorters were attracted (and got it wrong as they often do), the fears around retail and Amazon were factors in the negative sentiment, as were some softer results than expected. 

The thing is the SP price has not just recovered, once again its run ahead of value and from my strategic point of view, once the SP is significantly ahead of my range of calculated value, and I cant find a compelling reason for the increase, then its time to sell.


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## Miner (22 March 2018)

galumay said:


> Hey Miner, it wasnt really a takeover, RCG bought Hype and a couple of others and then decided to change their name to Accent Group (AX1). No doubt the business was sold down, the shorters were attracted (and got it wrong as they often do), the fears around retail and Amazon were factors in the negative sentiment, as were some softer results than expected.
> 
> The thing is the SP price has not just recovered, once again its run ahead of value and from my strategic point of view, once the SP is significantly ahead of my range of calculated value, and I cant find a compelling reason for the increase, then its time to sell.



Galumay
Thanks, and yes RCG  was not a takeover.
I hear your strategy and that makes me think twice to develop a good and robust strategy with an exit clause too.
Take care and Regards


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## tinhat (23 March 2018)

galumay said:


> I see AX1 hit a 12 month high of $1.25 today, that means its once again run a fair way ahead of my range of calculated value. It takes some pretty heady growth to support this sort of SP in any of my modelling. I think the optimism coming out of the HY results is a bit OTT. The fact that the PRP was pretty poor made the figures look better than they really were.
> 
> I am thinking I might sell out of AX1, its a double bagger at that price for me and I think it could drop pretty fast and hard with anything but the most positive of news going forward.




"Let your profits run" is the old saying. I must admit I am guilty of not cutting my losses but bailing out of winners out of nervousness from making a profit. Any experienced trader will say that is no way to make money from the stock market.

I subscribe to Lincoln Stock Doctor for fundamental analysis and the share price is above their valuation, but if the company continues to achieve above expectation growth then that valuation will also rise in time.

That said, RCG (the old AX1) was one of the few stocks I managed to successfully active invest in over the past few years. It displayed unwarranted volatility but had enough liquidity of trade in the stock to make it easy for a small scale retail investor like me to trade into and out of.

I must admit I've been thinking about taking an exit too. Perhaps it is worth setting up both an automatic stop loss and take profit position through your broker?

The problem I have is that I like to look mainly at companies with strong balance sheets and positive outlooks but I don't have a clue about retail. I don't understand popular culture, the materialist society, fads, fashions. All I know is that there are acres and acres of land and media messages dedicated to selling **** to people at stupid prices.


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## galumay (24 March 2018)

tinhat said:


> Any experienced trader will say that is no way to make money from the stock market.




I am not a trader though! Any experienced value investor will tell you to sell once the SP exceeds your calculated range of IV by a significant margin, with no compelling explanation, its time to sell!



tinhat said:


> Perhaps it is worth setting up both an automatic stop loss and take profit position through your broker?




Thats not an approach I had considered, also its not really consistent with my strategy, once I have worked through my decision making process I will take action - be it buy, hold or sell.



tinhat said:


> ...but I don't have a clue about retail.




I am hearing you! I just concentrate on the business, there a a few sectors I don't have a clue about!


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## galumay (26 March 2018)

I am out, sold today for $1.265, an 85% return of invested capital, plus dividends so total return on capital, 124% over 3.5 years so 35% per year, I have learnt my lesson about sticking to my strategy and selling when a company's price runs well ahead of my range of calculated value.

I believe there is some possibility the SP will run on to make new highs above $1.90, but a similar possibilty of negative sentitment would likely see it drop back well below $1, the most likely outcome IMO is that it will continue to sit around the current price until the future is clearer about their ablity to grow earnings.


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## tinhat (22 May 2018)

I sold today at $1.495. I want to hold a bit more cash going into June and the new tax year.


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## galumay (22 May 2018)

Well done @tinhat - i will be interested to see how the business performs this year. I was a sort of reluctant seller, but have come to believe sticking to strategy is important for me.


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## roland (25 May 2018)

I'm holding, got 'em at the right time (the little "P"'s in the graph) average is $0.79 so dividend yield on cost is currently 7.5%. Can't complain


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## galumay (25 May 2018)

I think my buy was about 65c, I have never thought about yield that way though. In my mind i think about the yield on the current SP, I think its self deceptive to calculate on invested capital. After all if you sold today, then the capital realised would be what you would calculate any potential returns on.


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## roland (25 May 2018)

galumay said:


> I think my buy was about 65c, I have never thought about yield that way though. In my mind i think about the yield on the current SP, I think its self deceptive to calculate on invested capital. After all if you sold today, then the capital realised would be what you would calculate any potential returns on.



I agree, but if you are intending to hold long term for yield, then I think it's a valid calculation. Makes me feel better anyway


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## galumay (25 May 2018)

roland said:


> Makes me feel better anyway




I think thats what made me stop doing it!


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## barney (8 July 2018)

Courtesy of @tech/a   Post dated 2nd July 2018


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## tinhat (16 July 2018)

Lincoln Indicators (Stock Doctor) dropped the stock today from its income and borderline star stock (growth) stock picks. They cited the following risks:

Growth is primarily driven by new store rollouts,
Tough retail environment,
High household debt,
Global expansion - AX1 does not own brand distribution rights in the jurisdictions it is seeking to enter as a retailer (Singapore and Malaysia),
Management transition,
Valuation (their valuation is $1.21).
"From an income perspective, although the gross forecast yield is slightly above the market average, we are wary that free cashflow, if it does not improve, will not be sufficient to cover dividend payments going forward."

If Lincoln's investment funds sold out today that may account for some of today's fall in stock price. I only hold one retail stock at the moment, GZL (Gazel) and that is also down quite heavily today, also off a recent run up in price.


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## systematic (16 July 2018)

Darn, I've not long been holding this one...could be a short hold at this rate!


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## galumay (16 July 2018)

Its tended to perform better than one might expect @systematic. I got out about 6 months ago for about $1.26, which was above the high end of my range of valuation at the time. I could have done better holding a bit longer but it was a good return and I slept better at night!


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## Darc Knight (31 December 2018)

The Athlete's Foot, AX1's flagship brand, is a specialty retailer of athletic footwear. AX1 operates 148 Athlete's Foot stores across Australia and New Zealand. The Athlete's Foot also expanded its distribution channel to online shopping site.
Strong buy rating according to MarketIndex
https://www.marketindex.com.au/asx/ax1


Accent Group owns a number of retail store brands including Platypus and HYPE DC. Although there have been concerns that Australian retailers are struggling from lower consumer spending, this certainly hasn’t been the case for Accent Group. It recently advised that trading has been “materially stronger” than expected. As a result, the company is on course to deliver a 15% to 20% increase in first half EBITDA. This could put the Accent board in a position to increase its dividend again. At present its shares offer a trailing fully franked 5.8% yield.
https://www.fool.com.au/2018/12/31/is-it-time-to-buy-nab-and-two-other-quality-dividend-shares/


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## galumay (31 December 2018)

@Darc Knight  AX1 has surprised me with being able to continue to create organic growth with its business, I am still comfortable with my decision to book the profit, I think its still a fairly precarious business, but you cant argue with the fundamentals!


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## Darc Knight (1 January 2019)

AX1 gained 3.45% (to $1.20) yesterday to finish the year at 301 on the ASX ranking. This is what I'm watching - to see what happens when it breaks 300 and how much effect VAS buying it up will have on its price. Thoughts anyone?


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## galumay (1 January 2019)

I honestly dont see it having a huge amount of upside, I looked back at my calculations for IV and my comments in my decision journal when I sold last March at $1.27 and it was well above the range of IV I calculated, I also worked up an expected value based on some back of the envelope probalistic assumptions about the business and arrived at a value around $1.30. 

It would seem to me to still have a higher risk of ending up at a lower price than the liklihood of it going much higher, an asymmetric bet round the wrong way!

One of my comments in my journal was, 
_
"I have some lingering concerns about the retail sector as a whole and the current price of $1.25 implies some pretty heady growth in earnings over the next few years. I calculate that cash flow would need to increase by around 30% from last year to support that sort of share price and that seems a tall ask."
_
Of course, Mr Market may strongly disagree with me and it may well run back up to ATHs of around $1-80.


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## Darc Knight (1 January 2019)

I was shocked that a Retailer was doing so well, let alone The Athletes Foot.
I was wondering if some of the price rise on Friday was due to expectations of VAS buying up, EMH and all?


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## Ann (1 January 2019)

Darc Knight said:


> I was shocked that a Retailer was doing so well, let alone The Athletes Foot.
> I was wondering if some of the price rise on Friday was due to expectations of VAS buying up, EMH and all?




You need to start charting young man. This retailer is not doing so well. This chart was drawn just for you DK.


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## Darc Knight (1 January 2019)

Ann said:


> You need to start charting young man. This retailer is not doing so well. This chart was drawn just for you DK.
> 
> View attachment 91075




Thank you. Yep, like most retailers I guess. Can you explain the 3% rise in price on Friday. Once it hits ASX 300, $2.9 bil VAS will buy in. Increase demand, increase price. That's all I'm watching.


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## galumay (1 January 2019)

I thought you were a FA type @Darc Knight ?! 

Be careful not be beguiled by the astrology types!


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## Darc Knight (1 January 2019)

galumay said:


> I thought you were a FA type @Darc Knight ?!
> 
> Be careful not be beguiled by the astrology types!




You're a braver Man than I


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## Ann (1 January 2019)

Darc Knight said:


> Thank you. Yep, like most retailers I guess. Can you explain the 3% rise in price on Friday. Once it hits ASX 300, $2.9 bil VAS will buy in. Increase demand, increase price. That's all I'm watching.



3% rise....someone put in an offer to sell at that level, someone else bought. Rule of thumb for buying and selling, buy on a Monday, sell on a Friday. Likely to have been a newbie with a story in their head.  And if VAS buys in, so what? They will be just another investor. It will also be weighted so who knows how many they will buy. They will buy over time, none of these professional investors want to distort the price in any way. Years ago, many years ago when I watched the S&P rebalances, I often saw stocks drop when they were added. No idea why just wild pointless guesses.


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## Ann (1 January 2019)

galumay said:


> I thought you were a FA type @Darc Knight ?!
> 
> Be careful not be beguiled by the astrology types!



Just a price trail galumay no fancy astrological mumbo jumbo as in Jupiter's clouds have disappeared so now we are all in for it....just a wee little wiggly line showing what the daily price close looks like and which overall direction it is headed. I like to know if the price is going up or down, don't care if Venus wants to take Pluto for a walk!


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## Skate (1 January 2019)

Darc Knight said:


> AX1 gained 3.45% (to $1.20) yesterday to finish the year at 301 on the ASX ranking. This is what I'm watching - to see what happens when it breaks 300 and how much effect VAS buying it up will have on its price. Thoughts anyone?




Darc Knight if I may, I wish to make a comment

AX1 was a successful trade back in May 2018. I took the trade between the yellow ribbon. (at the beach you swim between the flags, whereas I trade between the (ROC) ribbon)

*Explanation*
The yellow ribbon at the bottom of the chart is a Rate of Change (ROC) indicator, I have used the amber colour to indicate 'caution' as its not a good idea for me to take a position if the (ROC) indicator is below 0%

*Buy between the Gaps*
I snuck in between the gaps of the amber (yellow) ribbon to grab a few dollars. Eventually the (ROC) indicator kicked me out of the trade (highlighted by the 'searchlight') while the "trailing stop" wanted me to stay.

*I'm a wimp*
I'm a wimpy trader, at first sign of danger I'm out of the trade.

The weekly chart of (AX1) displays its fair share of a yellow ribbon - if a stock displays a lot of yellow it indicates a lack of interest.

Like they say a picture paints a thousand words & the chart should be easy to read.

*No one knows if a price is high or low*
With trading no one knows if a price is high or low, picking the top or the bottom even eludes the professional so we have no chance picking the top or the bottom of any market.

*Smart Investors*
The smart Investors want to buy at the very lowest price and sell at a much higher price to make money and if they have to screw the little guy along the way, well so be it.

Skate.


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## Darc Knight (1 January 2019)

OK, I'll still be watching the effect of VAS upon its share price. Something caused it to surge 3% Friday.
I'm gunna watch others lurking just outside ASX 200 or 300. VAS has 3 bil, STW and Blackrock well over 3 bil.


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## galumay (1 January 2019)

Ann said:


> ....just a wee little wiggly line showing what the daily price close looks like and which overall direction it is headed.




Thanks for taking my comment in good humour! I would tease a little more by pointing out the wriggly line actually shows where it has been, it gives no indication of where it's headed, that would be logically impossible! I better stop now though, otherwise I will attract others with less sense of humour and we will end up in a religious debate!

I suspect neither of us are buying AX1 anyway.


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## Ann (6 January 2019)

galumay said:


> Thanks for taking my comment in good humour! I would tease a little more by pointing out the wriggly line actually shows where it has been, it gives no indication of where it's headed, that would be logically impossible! I better stop now though, otherwise I will attract others with less sense of humour and we will end up in a religious debate!
> 
> I suspect neither of us are buying AX1 anyway.




Feel free to worship any deity who spins your wheels galumay! No debate from me 
Actually the wiggly line does rather tell me where it is going because I have seen where it has been. I doubt very much if I was going to buy it, (which I am not) I would get in before 90c proved its strength again. I can see its history and where there has been a shakeout of holders. That is what TA can offer, visible history. Nothing magic or predictive as such, that is why I never, ever draw an arrow in any given direction on any of my charts to indicate the future direction. The only exception is when I draw a swing trade calculation and that can be amazingly correct sometimes. Other times when I don't do it properly it is a big fail! So still not predictive 'cos many times I stuff the calculation.


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## $20shoes (19 March 2019)

Been keeping an eye on this one. There's a certain bullishness about the corrective test of the high volume are on the 8th -12th March. There may be volume moving in in anticipation of a rise. Indeed Money Flow indicators are very positive. The retracement itself is shallow and appears to be a minor move in a broader trend. 

Just in case people think this is a no - brainer, you can also spot some negative divergence in a few indicators as it approaches its early March highs, so pays to be on our toes here. 

A long position above the recent highs might present a good r/r though?


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## tinhat (19 March 2019)

$20shoes said:


> Been keeping an eye on this one. There's a certain bullishness about the corrective test of the high volume are on the 8th -12th March. There may be volume moving in in anticipation of a rise. Indeed Money Flow indicators are very positive. The retracement itself is shallow and appears to be a minor move in a broader trend.
> 
> Just in case people think this is a no - brainer, you can also spot some negative divergence in a few indicators as it approaches its early March highs, so pays to be on our toes here.
> 
> ...




That is the least bullish chart I have cast my eyeballs over for some time.


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## $20shoes (19 March 2019)

tinhat said:


> That is the least bullish chart I have cast my eyeballs over for some time.




Oh interested in what you don't like about it tinhat? You wouldn't go long above a break of recent highs?


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## $20shoes (19 March 2019)

A little more on what i do and dont like about Ax1. 

A large volume bar on 22/10/18 set up a supply/resistance zone. After another failed test to overcome it on 14 Feb this year, there was concerted push to overcome this area that produced a gap up on 21st March. 

The correction since then hasn't really seen enough supply to move prices down to 1.40, so my supposition is that prices will move up to elicit supply trapped between $1.60 and $1.70. Admittedly its heavy supply here, which I don't like. But I think an attempt will at least be made on these levels.


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## $20shoes (16 April 2019)

In today on the minor breakout within a larger range-bound action. I took a punt on a better R/R with this setup with an increased risk that I'll be caught in some churn. But today's bar sets the scene for an imminent break to the upside. Happy with today's clean action.


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## explod (16 April 2019)

GumbyLearner said:


> Thought it was time to start a thread.
> 
> RCG is an Investment Holding company which owns the Athlete's Foot in Australia and New Zealand.
> 
> ...



Gumby, one of the smartest persons I have ever known was kicked off of AFf a few years back and when I see his threads still arising it does get to me.


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## tinhat (16 April 2019)

$20shoes said:


> Oh interested in what you don't like about it tinhat? You wouldn't go long above a break of recent highs?






$20shoes said:


> A little more on what i do and dont like about Ax1.
> 
> A large volume bar on 22/10/18 set up a supply/resistance zone. After another failed test to overcome it on 14 Feb this year, there was concerted push to overcome this area that produced a gap up on 21st March.
> 
> ...






$20shoes said:


> In today on the minor breakout within a larger range-bound action. I took a punt on a better R/R with this setup with an increased risk that I'll be caught in some churn. But today's bar sets the scene for an imminent break to the upside. Happy with today's clean action.
> View attachment 93855




Hi shoes

I haven't kept my eye on this thread. I'm not a chartist, but I am trying to learn, but it is hard when you brain starts to calcify, which my consumption of red wine does not assist with. My simple observation of the chart you posted on 19 March is that no higher-high had been posted and that there was no interesting change in volume in what turned out to be a double-top.

Looking at your post of today however, that is an interesting chart.

I like AX1 because it is a financially sound business. I've successfully traded in and out of it over a few years. As a small bit investor I try and look to diversify into different sectors as much as I can but I don't think I own a retailer at the moment and haven't for a while now.

I hope it breaks up from here but there is a lot of overhead resistance above.


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## peter2 (9 December 2019)

The price of AX1 is back at the long resistance level again (1.70). There's a sequence of higher lows leading up to now. This chart looks quite bullish, but price is still below all time highs (~1.90) of three years ago. Like others before me this is not a stock I'm comfortable trading (retail).


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## tinhat (20 December 2019)

AX1 (Accent Group) has gone on a gallop recently. We've seen a ascending wedge forming on the weekly with the stock consistently putting in lower lows over the past twelve or so months. 





A nice cusping formation started developing on the daily in later in the year. This week it looked like the spring might be loading up (potential cup and handle?) and BOOM!






Zooming out to the monthly, this week's break-out looks set to test the all time high of 2016:






Which would be an all time high for AX1 in its current form of Accent Group (post the merger of RCG Corp with the NZ Accent business).

We might be in for a period of AX1 testing resistance at 1.935. Being a shoe retailer the timing of this break-out certainly is interesting given that we should get data on sales over Christmas early next year. I hold.


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## mullokintyre (11 August 2021)

Not a lot of chatter on Ax1 over past two years.
Come off its most recent highs.
Annual report due to be released on 20/08.
Down 7% today which suggests that some people in the know think it may not be as good as  once expected.
Mick


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## divs4ever (11 August 2021)

i expect  they ( the punters ) are thinking  smaller bricks'n'mortar  are in serious trouble ( and generally they would be correct )

 is AX1 different ( this time ) 

 i don't know   , allegedly the new team ( i bought in when they were RCG ) are pretty sharp operators 

 now PERSONALLY i would NEVER buy shoes without trying them on first  , but it seems plenty of others are fine buying without trying ( them on )

 i hold these at no cash risk ( recovered the investment cash when they were still RCG ) ..

 DYOR

 just a nice div. payer in the bottom drawer for me ( unless something spectacular happens )


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## divs4ever (11 August 2021)

PS i bought in @ 66c in June 2014 

 and stocks like this is why i like small caps ( plenty of room to grow )


DIVIDEND TYPEDIVIDEND AMOUNT ($)FRANKEDEX-DIV DATEPAY DATE*Interim*0.080100.00%10/03/202118/03/2021*Final*0.040100.00%09/09/202024/09/2020*Interim*0.053100.00%04/03/202019/03/2020*Final*0.038100.00%11/09/201926/09/2019*Interim*0.045100.00%06/03/201921/03/2019*Final*0.038100.00%12/09/201827/09/2018*Interim*0.030100.00%01/03/201822/03/2018*Final*0.030100.00%08/09/201725/09/2017*Interim*0.030100.00%02/03/201723/03/2017*Final*0.030100.00%08/09/201623/09/2016*Interim*0.025100.00%29/02/201624/03/2016


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## galumay (11 August 2021)

divs4ever said:


> i hold these at no cash risk ( recovered the investment cash when they were still RCG ) ..




One I wish I hadn't sold, like you I owned from the RCG days, I sold at about $1.26 for a CAGR of 35% and an overall return of 125% over the 3 years I held. They have doubled again since then as well as the divvy stream so probably x3. Interesting reading what I wrote at the time of selling in my journal, i was worried about how far ahead of my range of IV they had run, they had also recovered from a big dipin 2017 when they plunged back down to 70c so I was a little nervous about the potential for another drawdown like that. 

What really irks me is where I redeployed that capital. It was a bad decision!!


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## divs4ever (11 August 2021)

don't worry i have made blunders elsewhere 

 but when i started out investing 

 one of  my 'hurdles'  was do i want to hold that share forever ( realizes take-overs and bankruptcies happen  , so some will always cease to exist  )

 HOWEVER  after a few big risers  , i saw the wisdom of rescuing  the cash invested ( to reinvest elsewhere  ) when it was sensible 

 some like say GRR  i have resisted  recovering that cash , time will tell if that was a correct choice or not 

 i DO exit shares completely but that is usually  because the company makes a decision  i don't like ( or a string of them like ORG and ANZ )  not related  to the share price


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## galumay (11 August 2021)

I think like most things in investing, there are no hard and fast rules you can apply, the 'science' is being able to understand the financials and business accounting, an understanding of how businesses work and having a process to consider valuation. The 'art' lies in being able to apply that science in varying contexts and situations! 

Also the feedback loop is very long, when I sold AX1 it certainly looked a good decision, and initially the decision to reinvest the capital where I did looked like a good decision, now 3 years later both look like poor decisions!! Thing is that capital has now been redeployed elsewhere and may prove to be either the best or worst (or somewhere inbetween) decision of them all! We dont really know until we stop investing, convert all investments to cash and then assess the overall, absolute performance of the investment portfolio or its entire life. Until then any assessment of performance is purely theoretical.


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## divs4ever (11 August 2021)

was more aiming for a lifelong income stream  , to supplement the pension  when i started planning 

so many of the multi-baggers  were quite unpredicted  

 i was just happy  for a 6% to 8%  return per year  , and hoping inflation didn't make those divs worthless (  if say 10% inflation )


cash mightn't be worth much in 5 years  time 

 as a tax-paying worker  , my first take home pay was $25 a WEEK ( back in 1972 ) now days it is hard to get a decent worker for $25 an hour ( unless you are running a sweatshop  or mega-corp franchise )

 so don't sweat the cash too much  ... they are just typing it on a computer now , they don't even cut down a tree to print on it


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## galumay (11 August 2021)

Regardless, as I say, its really very hard to know if what you do is working, thats the long time feedback loop. 

There are lots of hazards, resulting and path dependency are but two of them. I think the written decision journal helps, at least with the self delusion!

The only final measure is cash, you can have a share paying 10% dividend, up 1000% over the years you have held it, tomorrow it can go to 0. That CAGR & 1000% theoretical return worth not a single cent. Plenty of bankrupt investors who had outstanding 'returns' for years - right up until they didn't!

Hubris & humility are two of the most useful mental tools of the investor!   

Anyway, lets go and find some more AX1's!


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## systematic (11 August 2021)

mullokintyre said:


> Not a lot of chatter on Ax1 over past two years.
> Come off its most recent highs.
> Annual report due to be released on 20/08.
> Down 7% today which suggests that some people in the know think it may not be as good as  once expected.
> Mick



Almost a one year hold for me so I’ll hand around and hope for not too much of a drop


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## divs4ever (11 August 2021)

well for the ADVENTEROUS , there is ART  , i was in at the start of trading ( 1st day of listing ) @ $1.01  but out again @ $1.25   , the day they announced the US acquisition 

 it looked like a cheeky gamble  in a virus racked economy , but then the  acquisition gave me flash-backs to SGH  so ran for the parachute 

 BUT is now back under $1   .. those young(er ) and brave(r)  than me ,might find a midterm  hold  at least until this lock-down madness settles down 

 until we see  at least two sets of results after the float  , (imo ) it must remain a speculative share 

 DYOR

 i will WATCH ART but am unlikely to buy back in unless there is mind-changing news


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## galumay (11 August 2021)

I shall have a look, although as someone who burnt a huge amount of capital in SGH your comments gave me palpitations.


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## divs4ever (11 August 2021)

well the SGH affair certainly helped me become more cautious  , ESPECIALLY now lock-downs are degrading the audit and due diligence processes 

 now my loses in SGH weren't huge  i grabbed for a falling knife and caught it in the foot  ( unfortunately  NOT with my toes )

 good luck 

Australia lowers bar on public companies' disclosures, extends virtual AGMs​
https://au.finance.yahoo.com/news/australia-lowers-bar-public-companies-091530343.html

only a couple of years after the Hayne Royal Commission highlighted various regulator lapses as well


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## mullokintyre (18 August 2021)

AX1 result sorta good and sorta bad.
perhaps those people in the know were right.
All the good bits,  total sales up by 20% and NPAt up 39%.
divvy of 3.25 takes the full year  grossed up divvy to around 7%.
The bad bit is that sales for the first part of this fin year are well down, probably not helped by all the lockdowns throughout the country.
Not sure whether to stay in this one for the divvys, or to bail .
Decisions, decisions.
Mick


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## divs4ever (19 August 2021)

i bought in @ 66c in 2014 when it was RCG



 i will probably stay ( so far )

 but while there is currently so much uncertainty ,  i can see you quandary 

 i still can't believe so many will buy shoes on line  ,  socks , laces ,inner soles  etc.  sure but SHOES ??

 good luck


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## mullokintyre (19 August 2021)

I could be persuaded that online buying will become the norm.
It would suit the wholesalers- no need for expensive shopfronts, keeping stock at so many stores, employing pretty vacuous things to try and pretend they are not bored shitless fluffing around the store..
if the public get used to the idea, thats the way it will go.
Have a look at what happened to bank branches all over the country.
In ten years time, nobody will even know how to write a cheque , much less actually do one.
It will be electronic banking or nothing.
Why not go for electronic retailing?
Either way, it will probably kill the middle man, unless you are amazon.
Why have a shoe shop with lots of different brands when you can just go to a wholesalers warehouse and pick them out online?
Things are changing, no doubt about that.
Mick


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## galumay (19 August 2021)

@divs4ever, I always thought that when I held, shoes are something people like to try on physically. Sure there will be some online sales but I dont think it threatens AX1's business model. Your point is something I think of not infrequently as a long term investor, the cost base ends up being so low relative to current price over time, that you are protected from just about anything bar the company going to 0. Makes it very easy to keep holding.


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## mullokintyre (11 September 2021)

Stayed in Ax1, mainly because I bought two new pairs of sketches online from them.
Mick


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## divs4ever (11 September 2021)

mullokintyre said:


> I could be persuaded that online buying will become the norm.
> It would suit the wholesalers- no need for expensive shopfronts, keeping stock at so many stores, employing pretty vacuous things to try and pretend they are not bored shitless fluffing around the store..
> if the public get used to the idea, thats the way it will go.
> Have a look at what happened to bank branches all over the country.
> ...




 obviously you have never been a sales-person ( although if you worked at Myers that wouldn't count either )

 there is a whole hidden art in face-to-face sales  , unless the websites resort to subliminal messaging ( allegedly illegal , but have seen no attempts to monitor it ) bricks'n'mortar  has it's own aces ,  smells , noises , subtle personal interactions  , and of course seeing what you are buying as close as you want to look .

 almost the same as buying your new house on-line  would you do it , i wouldn't 

 but of course i am part of the older generation  and taught by several Great Depression associates over the years 

 looks all efficient  and cost effective , but you reduce the chance of impulse sales 

 and REMEMBER all those jobs displaced  were tax-payers , consumers and somebody's customers 

 Amazon and Co. look good now  but an aging , shrinking , less affluent population  is coming fast 

 have hardly ever used cheques  , and the banks  created their own doom , maybe  my focus on the second tier banks was the right move  despite being for different reasons


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## Miner (11 September 2021)

divs4ever said:


> obviously you have never been a sales-person ( although if you worked at Myers that wouldn't count either )
> 
> there is a whole hidden art in face-to-face sales  , unless the websites resort to subliminal messaging ( allegedly illegal , but have seen no attempts to monitor it ) bricks'n'mortar  has it's own aces ,  smells , noises , subtle personal interactions  , and of course seeing what you are buying as close as you want to look .
> 
> ...



I am digressing on face to face !
Bought my investment property in Brisbane and saw it after 3 years.
Held it for 9 years and during that time in total 3 weeks, it was not occupied.
Bought washing machine 3 months back using appliance on line. Super Happy.
Prior to Covid used to buy shirts and trousers from UK online. Never had to return

However on the context  I would wear my shoes first before buy.
But AX 1 can not survive on shoes alone.


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## mullokintyre (11 September 2021)

divs4ever said:


> obviously you have never been a sales-person ( although if you worked at Myers that wouldn't count either )
> 
> there is a whole hidden art in face-to-face sales  , unless the websites resort to subliminal messaging ( allegedly illegal , but have seen no attempts to monitor it ) bricks'n'mortar  has it's own aces ,  smells , noises , subtle personal interactions  , and of course seeing what you are buying as close as you want to look .
> 
> ...



You are quite correct, i have never worked in retail sales, though for a very short time I was involved with selling software to unsuspecting businesses.
Problem was I could not look them in the eye and lie about how the software would solve all their problems.
Others were far better at it than me. I went back to trying to installing the software and trying to make it work like the salesmen promised.
Mick


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## Miner (11 September 2021)

mullokintyre said:


> You are quite correct, i have never worked in retail sales, though for a very short time I was involved with selling software to unsuspecting businesses.
> Problem was I could not look them in the eye and lie about how the software would solve all their problems.
> Others were far better at it than me. I went back to trying to installing the software and trying to make it work like the salesmen promised.
> Mick



mate - if you are in Perth, I do desperately need services from a person like you. No joke. Telstra is horrible. Please PM


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## divs4ever (11 September 2021)

not ALL selling involves exaggerating the qualities of the product up for sale  ( but sadly that is what management often expects you to do )

 like one other member here i rose to local prominence by becoming the local  paper boy for several years  ( it wasn't my first source of income but it was the first my parents were aware of  ) ,  straight service ( being there with the right product at an acceptable price ) has a lot going for it , and a quick smile and cheerful comment helps  to inspire them to return 

 AX1 issues will include be fewer people  doing recreational exercise  during and AFTER the lock-downs  ,  just fewer activities out of the residence ESPECIALLY if work from home stays as a permanent feature  ( i walk around home barefoot  so even sock usage has plummeted )

 however AX1 has a management team with a solid reputation  , maybe they can grow by absorbing the struggling rivals 

 but gee if only the funeral service providers would drop in price , they look set for a good run in the mid-term  ( i hold PFP )

 still with AX1 i have only the profit running ( i took the cash risk out when it was still RCG )

 one risk is AX1 will rely on too many 'trendy brands ' and become the Myer of the footwear industry 

 cheers


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## divs4ever (11 September 2021)

Miner said:


> mate - if you are in Perth, I do desperately need services from a person like you. No joke. Telstra is horrible. Please PM



 here in QLD , Oplus/NBN is probably no better 

 i strongly  suspect a  lot of the problem is the NBN 'backbone ' of the system ( although the 4G network isn't without problems ) AND  all the data discretely uploaded from various 'smart devices ' 

( you should see how many cookies and trackers i delete everyday DESPITE using  ad-blockers )

 however the upside is 'essential Government services ' keep crashing  at peak times  , and  MIGHT embarrass them into mass resignations


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## mullokintyre (15 September 2021)

AX1 up 13% today on above average volume.
Its already ex div, so don't really know why the big jump today.
Will just have to wait and see what announcements were leaked out today,.
Mick


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## divs4ever (15 September 2021)

SUL  IS UP 3 percent  today as well , i hold both 

 so maybe there is more hopium about  on a 'normal ' Christmas and less lock-downs 

 but haven't seen anything to boost  the share price except  a Dow Jones  report  on a Morgan Stanley upgrade 

*DJ Accent Upgraded to Overweight from Equal-weight by Morgan Stanley

*DJ Accent Price Target Raised 8.3% to A$2.60/Share by Morgan Stanley


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## mullokintyre (18 November 2021)

ax1 announced that they have become the exclusive OZ distributor for Reebok brands.
Did not know that Reebok still existed.
Thought they had been killed off by Nike, Adidas, and Puma.
There ya go.
Not sure if it will make a lot of difference to the share price though.
Mick


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## mullokintyre (19 November 2021)

Annual out today.
AX1 have been hit big time by the COVID store closures/lockdowns in Vic and NSW over last quarter.
They reckon it cost them 40mill down on  expected sales.
On the plus side yhey have seen strong store front recovery since the lockdowns ended,
I will bail today.
The experience overseas shows that there will be further lockdowns next autumn/winter, so  it will be hit again.
Mick


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## finicky (12 March 2022)

Another nasty looking break of support chart ($2). I would guess lower eventually.

Weekly


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## divs4ever (13 March 2022)

galumay said:


> I shall have a look, although as someone who burnt a huge amount of capital in SGH your comments gave me palpitations.




 SGH  was one of those falling knives i reached for   and got the knife firmly in my foot ( not an amputation  , but a NASTY , vivid lesson  of what can go wrong  , especially when my instincts were screaming DON'T do it )

  i did recover a small part of the capital  , but i did know better ( than to buy into law firms ) , but did it anyway 

 but that said  i did recoup any losses  when XIP was taken-over 

 now i bought AX1 when it was  RCG ( back in June 2014 ) rescued the investment cash in June 2015  ( maybe a bit early in hindsight )

 and in my view AX1 has been the ( delightful ) surprise packet  in the virus saga  , you had dozens of reasons  of why sales should drop  ( lock-downs , schools  closed , sports events cancelled , work from home  , health activities restricted , shopping centres deserted , etc etc  , ) and i for one would NEVER buy shoes online , but it seems the public largely disagreed 

 so to see this come through  is pretty fair condition was a happy outcome for me 

 but would i buy more of AX1  above say 70 cents , probably not , but time will tell 

 IN THEORY this business should be an indicator of a genuine retail recovery


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## finicky (17 May 2022)

*Big* management purchases on-market recently, particularly non exec director Brett Blundy who purchased almost *9 million* shares. He's a billionaire though, so perspective.

Brett Blundy
4,000,000 shares buy @ 1.28
13 May on-market

Brett Blundy
4,960,000 shares buy @ 1.27
9-10 May on-market

Also the CEO  D. Agostinelli
162,000 shares buy @ 1.33
11 May on-market

Chance that the chart has put in a low but early days; it's not out of its downtrend channel yet. It is shaping up as a monthly hammer candle so far for the very incomplete month of May.

Staunch dividend payer, book value slow growth, most recent *lowest* ROE was 10.5% in fy17 which would suggest to me that it is worth at least 2x book value, which equates to a price of ~1.60. Not a big discount in such uncertain times.

Daily


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## divs4ever (17 May 2022)

i will have to watch  this  closer , there might be a chance to add more  ( cheaper than my original buy )

 cheers


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## finicky (19 July 2022)

Pretty sure I'd be buying a tranche of these if *any* of my specs had flourished so that I could part liquidate some for cash to redeploy into earners. The past 8 years of fundamental performance for Accent has been excellent I think, with rising book value over 8 years and even rising Return on that book value (ROE) for the last 5 years ending fy21. This financial year should break the positive trend however. 

The *past* update in April, while subdued and implying lower earnings, was not alarming, to my ears anyway, but uncertanities were sufficient that they could not commit to fy22 profit guidance.

My notions on the chart - the price has moved out of the more severe downtrend best fit line and I still suspect the low was put in just off 1.20. Price has already beaten the last peak of the downtrend but pulled back. The low of ~1.20 has pretty much met my target from the sloping neckline of an irregular H&S top (Dec'20 - Feb'22)

Trading update (from back in late *April*):
"Sales performance from late February has improved over the -10% LFL reported for the first 
eight weeks but remains subdued compared to expectations. The Company has continued to 
focus on a full price, full margin sales strategy, which has driven an improved gross profit % 
ahead of both expectations and last year. Overall inventory levels are in line with plan,
although the Company continues to experience some delays and cancelations from third party 
brand partners.
Given ongoing uncertainty, the Company has maintained its decision not to provide forward 
sales or profit guidance for H2 FY22 or the full year FY22."

Not Held

Daily


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## divs4ever (19 July 2022)

these are a lot like APE ( i hold both AX1 and APE  without investment cash risk )

 both have a thousand different reasons ( seemingly ) why they should be struggling now ( and in the near future )  but somehow   get the books into shape  ( even the occasional acquisition )

 BUT there is always a chance the wider economy will melt-down   , so must be treated as 'higher risk '  than some ( like WOW or WES )


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## finicky (19 July 2022)

divs4ever said:


> BUT there is always a chance the wider economy will melt-down , so must be treated as 'higher risk ' than some ( like WOW or WES )



Yes agree.
I was looking at Reece (REH) just now. That's always been viewed as a safe bet* pretty much, but has also always traded at a large premium to intrinsic value. *susceptible to builders going bankrupt and interest rate hikes I guess, so not in the league of WOW or WES.
Decided against REH as a candidate because it still seems overvalued to me despite the steep fall in price. Also the chart of REH looks like a > 50/50 possibility of lower to my eye.


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## divs4ever (19 July 2022)

finicky said:


> Yes agree.
> I was looking at Reece (REH) just now. That's always been viewed as a safe bet* pretty much, but has also always traded at a large premium to intrinsic value. *susceptible to builders going bankrupt and interest rate hikes I guess, so not in the league of WOW or WES.
> Decided against REH as a candidate because it still seems overvalued to me despite the steep fall in price. Also the chart of REH looks like a > 50/50 possibility of lower to my eye.



 unusual times currently  ( all over ) but SOME companies will  be  buffeted less  , am just not sure who they are this time 

 normally i would be looking for something like BXB  but there must be millions of pallets stranded in  stalled shipping containers  or companies with heavy exposure to government contracts  ( but surely governments must face austerity soon )

 i had pinned my hopes on API but then WES moved in and acquired them  (  and several other  'boring but profitable companies have been bought up as well )

 the climate agenda may easily strangle industry and construction ( and possibly mining  )


----------



## finicky (22 July 2022)

Just lost an elaborate explanation of why I think AX1 is still worth at least $1.60 fair value on guidance released today of mid-range EBIT of $62Mn for FY22.
Technical glitch on the ASF platform which told me to press 'back' and 'refresh' which succeeded in vanishing my post.
Anyway upshot and big news is that I bought an AX1 starter pack at $1.365


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## finicky (22 July 2022)

So my notions on the current intrinsic value of AX1 rest on a comparison between estimated FY22 EBIT of $62Mn, just guided by the company, and the only comparable year's EBIT on Commsec which is FY18 of $65Mn.

FY18 ROE = *11%*
FY18 Book Value = 0.73

But

FY22 est Book Value = 0.80 approximately, so
FY22 ROE therefore = (73 ÷ 80) x *11% *= 10%

So I figure a Return on Equity of 10% for a quality company (based on excellent historical performance) is worth better than 2 x Book Value.

2 x 0.80 (BV) = *$1.60* intrinsic value
Which admittedly leaves out a number of inscrutable complicating factors that are way too niggly for me. Also this ignores macro factors that are eventually going to smash the prices of everything presumably.

Held


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## Knobby22 (22 July 2022)

My pick for the monthly competition. 
Today's drop won't last. Hope for a decent rise in August.


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## finicky (21 August 2022)

Obviously the buyers like the FY22 report on Friday but if you based the valuation on FY22 results alone the share price would be expensive on a PE of 29 and ROE of only 9% on book value of 0.81.
But there's good reason to think that performance will bounce back in FY23 and future years, caveat extraneous events. The company reiterated that they lost a lot of sales due to 400 Covid store lockdowns in H1 and a drop in margin of 190bp was Covid related.

The full year FY22 dividend yield is still 3.8% on the reduced performance but say If the dividend reverts to that paid in FY21 the yield will be 6.7% ff on the current price.

My sense is that the chart might pull back if it reaches the 1.70s zone as it is getting towards overbought on the daily chart and is at the end of a measured move compared with the rally off the bottom. But definitely a dividend hold investment for mine for the small amount that I bought.

Held

Daily


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## divs4ever (21 August 2022)

am pleasantly surprised at the resilience of this company 

 i didn't really expect many folks to buy shoes online ( except collectors ) but am happy to be proven wrong

 given the current medical trend  ( SADS )  i can't see the sports shoe section booming  , but will be happy to be proven wrong again 

 i bought in  @ 66 cents in June 2014 when they were trading under the RCG ticker code  , a welcome occupant of my 'bottom drawer '


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## finicky (21 August 2022)

divs4ever said:


> i didn't really expect many folks to buy shoes online ( except collectors ) but am happy to be proven wrong



Yeah divs4ever, they said their digital channel is still growing FY22. I guess if you already know your size for a brand and model it would be fine. I notice from observing someone I know that some people have no compunction generally about  returning items for a refund.


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## divs4ever (21 August 2022)

i hardly ever buy shoes (  have been a barefoot guy for decades , so by the time i buy new ones the sizing  system has changed  AGAIN )

 so buying RCG   'as a safe-haven ' play  very much amused a trading buddy  (  who was a former sales manager  )

 i try to get the shoe purchase  correct the first  time , incapacitating injuries to my feet  used to limit my income  ( limping back to return them is not my favorite past-time )

 and have had plenty of feet/ankle damage in the past ( from other activities )

 now i am still trying to  foresee the consequences  of the 'work from home '  trend  will that meaningfully  decrease shoe sales ??

 say 5% less work/dress shoes  required ( as office visits will be rarer ) ( but maybe more joggers for the treadmill/exercise bike )

 AND the possibility  of intermittent supply chain issues  ( mainly glitches in the shipping industry )


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## Knobby22 (21 August 2022)

Many people buy shoes more as a status symbol. It's replaced watches.
When I need a new pair of runners for gym I head off to Harris Scarfe and spend $50.
If you can find anything uner $120 with Accent it's probably replacement shoelaces, and much of the range is at least $250.

That said, though I expect eps to be much higher next year, it won't get back to pre pandemic levels in the short term as rising interest rates will bite


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## finicky (20 September 2022)

There goes the dividend (by two and a half times) that earlier tempted me to buy a tranche @ 1.37.
Just noticed that another director bought a good whack of shares on market Aug 26 @ 1.65
Tempted to buy more today but not impressed by the daily chart after this break of recent support and anyway feel I've lost my mojo. Considering surrendering my affairs into the hands of a conservator.

Held

Daily


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## mullokintyre (20 September 2022)

finicky said:


> There goes the dividend (by two and a half times) that earlier tempted me to buy a tranche @ 1.37.
> Just noticed that another director bought a good whack of shares on market Aug 26 @ 1.65
> Tempted to buy more today but not impressed by the daily chart after this break of recent support and anyway feel I've lost my mojo. Considering surrendering my affairs into the hands of a conservator.
> 
> ...



@finicky ,  I found a green white and pale blue Mojo lying on the ground in the carpark of Monkey Mia resort yesterday.
Could it be yours??
Mick


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## finicky (20 September 2022)

Its hanging around somewhere. Not on me for sure


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## divs4ever (11 November 2022)

Trading Update
Accent Group Limited (ASX: AX1)
Accent Group Limited (the Company or Group) today provides an update on trade for the
first 18 weeks of FY23.
Total Group owned sales YTD are up 52% compared to FY22. FY23 gross margin % YTD is
up 570 bps on FY22.
Group CEO Daniel Agostinelli said “We are very pleased with trade to date which has been
above expectations. Our continued focus on driving full price, full margin sales has resulted
in strong margin recovery from last year. Our store opening program is on track and we
expect to open around 50 new stores in H1.
Whilst we provide no forward guidance, inventory levels reflect strong deliveries of exciting
new product across all banners, and the Group’s in-stock position along with sales and
operational plans are well set heading into the three most important trading months of the
year.”
The Company advises that H1 FY23 will be a 27-week reporting period ending 1 January
2023 compared to the 26-week reporting period ended 26 December 2021 in H1 FY22.

===========================================================================

DYOR

i hold AX1 'free-carried' ( bought as RCG )

am not sure i can see their enthusiasm ( by opening so many new stores ) in the year to come

maybe they think more folks will be walking ( as opposed to using public transport or driving )


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## finicky (11 November 2022)

As above ..
Looks like Accent customers aren't fazed yet by impending global financial destruction.
Sales YTD up 50% on much better gross margin!

Held

Screenshot (since I'd aready done it b4 seeing divs post)


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## divs4ever (11 November 2022)

hopefully i am wrong with my pessimism 

 but gee unless everyone buys new shoes to help the can-kicking  , i can't see where the extra sales are coming from , WES ( and their work-wear/safety wear  arm ) isn't  big enough to give us a quick conformation  maybe SUL and Rebel Sports  might be an indicator


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