RCG snaps up Hype DC

RCG snaps up Hype DCShares in the owner of Athlete’s Foot and Dr Martens RCG Group soared yesterday after it announced plans to acquire Hype DC Pty Limited, another footwear retailer, for an expected price of $105 million.

Hype sells premium, exclusive and limited edition sneakers, curated from the world’s leading brands. With 57 Hype DC and three Shubar retail stores,  it generated group sales in 2016 of approximately $120 million.

Investors welcomed the announcement sending RCG 24.3 per cent higher to close at $1.81

The founders of Hype Danny and Cindy Gilbert will continue to manage the business.

Mr Gilbert will join the RCG board as an executive director.

The deal will funded by a $52.5 million share placement to Hype investors, a $13.1m unsecured vendor note and $39.4m in cash and debt.

RCG says the acquisition will be earnings accretive in 2017.

“Hype is an outstanding business that is perfectly aligned to RCG’s strategic objectives,’’ RCG chief executive officer Hilton Brett said.

“We look very forward to working with them as we continue to break new ground in the distribution and retail of branded footwear in the Australian and New Zealand markets.”

RCG said its FY16 underlying earnings before interest, tax, depreciation and amortisations (EBITDA) is likely to be $60 million. This is at the top-end of its guidance range.

Underlying earnings in FY17, including the Hype DC deal, are expected to be at $90 million.

An award winning author and journalist, commentator, lecturer, and speaker, Leon is a freelance business journalist who covers a range of areas including politics, strategy, globalization, leadership and all the big trends ahead. His main skill is summing up all the news that’s around. For the last 30 years, his main focus has been on management issues. He also produces two podcasts for RMIT University, Talking Business and Talking Technology. Leon has worked for Fairfax, News Limited, AAP and the Herald and Weekly Times.

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