In the small-cap space, three stocks have come out with stellar earnings and business performance during the earnings season: furniture retailer Fantastic Holdings Limited (ASX: FAN), coffee and donut franchise owner Retail Food Group Limited (ASX: RFG) and footwear retailer RCG Corporation Limited (ASX: RCG).
Fantastic Holdings Limited
The furniture retailer has had a brilliant trading year. The turnaround strategies it has implemented have worked well. Only a few years back, the business was struggling to find growth. New management and sale of underperforming businesses have put the business in the right direction.
Group sales for financial year 2015 were up 11% to $496.9 million. Same-store sales were up 12.2%, indicating the company's health is improving. In January, Fantastic sold The Dare Gallery.
Fantastic's sofa-only business, Plush, also performed well with sales increasing by 43% from the previous year. All in all the company is set for growth and the share price is likely to rise.
Retail Food Group Limited
Australia's largest franchise manager, Retail Food Group Limited, had outstanding business performance for the year. Sales were up 63% and net profit after tax was up 49% compared to previous years. The owner of such franchises as Michel's Patisserie, Gloria Jean's Coffees and Donut king increased the number of outlets by 73% to 2,450.
The company now has a significant international footprint with the acquisition of Gloria Jean's Coffee in 2014. It has also acquired mobile coffee business Cafe2U and Di Bella Coffee. The massive push in the coffee business will provide growth both in domestic and international markets. More coffee outlets will be added to the network in the future and fewer pizza or donut outlets. Since listing in 2012, total shareholder return has been 30.3% on a compounded annual growth rate (CAGR) basis.
RCG Corporation Limited
Footwear retailer RCG Corporation Limited has delivered a total shareholder return of 547% or 31% on a CAGR basis over the last seven years. The owner of more than 300 stores, RCG has exclusive distribution rights for 12 international iconic footwear brands. A recent acquisition of another footwear importer, distributor and retailer Accent group has added names like Platypus stores, and brands like Timberland and Sketchers to the list.
This strong portfolio of footwear brands will continue to provide growth for the business. For the 12 months to June 30, 2015, a record net profit after tax of $13.7 million was announced, up 16% from the previous year.
Foolish takeaway
In the current volatile markets, these three businesses are making all the right moves. They are adjusting their business models to get rid of underperforming divisions and acquiring new businesses that will provide synergy and future growth. They operate in staple industries and their share prices should rise as they continue to grow.
