ferrets stock to watch: colorado group ltd

Ferrets Stock to Watch: COLORADO GROUP LIMITED
08:36, Tuesday, 27 June 2006

TAKEOVER SPECULATION FOR FOOTWEAR AND APPAREL GROUP

Sydney - Tuesday - June 26: (RWE Aust Business News)
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OVERVIEW
********

Investors have kept a wary eye on Colorado Group Ltd (ASX:CDO) as
the company ran into troubled times earlier in the year, reflected in
three profit downgrades over the same period.

But what has maintained investor interest alive is the
possibility of a takeover in the wings.

Last week Affinity Equity Partners emerged with a 13.82 per cent
stake in the company, leading to speculation that the private equity
group might finish the job and grab control.

Colorado had already received one please explain from the ASX
when its shares shot up from $3.45 to $3.72 on June 20.

In reply Colorado said it was not aware of any information that
could be an explanation for recent trading.

The company maintained the view that its operating profit before
abnormal items and income tax for the half year to July is not expected
to vary from the previous half year by more than 15 per cent.

Colorado said the company had no reason to think it may show any
material abnormal or extraordinary profit for the half year.

It mentioned another factor which added to the company's woes,
the resignation of the chief operating officer and acting CEO, Eddie
MacDonald, effective from September 15.

Meanwhile the Colorado board has made significant progress in its
search for a new CEO and is currently in advanced discussions with a
short list of high-quality applicants.

An announcement regarding a new CEO is expected shortly.

Until a new CEO is formally appointed and joins the company, the
board will participate in weekly management meetings to ensure that the
current business initiatives and strategy are progressing appropriately.

The board has also recently strengthened its senior management
team by appointing high quality people to the leadership roles for Diana
Ferrari and Marketing.

The board has also appointed Gresham Advisory Partners to assist
it with various corporate and financial matters.

SHARE PRICE MOVEMENTS
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Colorado Group shares yesterday held at $4.42. Rolling high for
the year has been $5.12 and low $3.16. Dividend is 24c to yield 5.43 per
cent. Earnings per share was 38.4c while p/e ratio is 11.51. The company
has 95.6 million shares on issue with a market cap of $422.7 million.

Back in March, chairman Bill Gibson told shareholders at the
annual meeting that he would be upfront with them outlining the true
financial position of the company.

"The overall result for the last financial year was below
expectations for our great company," he said.

"It was a difficult and volatile retail trading environment, but
the company recognised that the primary issues related to the poor
execution of internal initiatives, not the external environment."

Mr Gibson said the group's key financial results in 2005/06 were:

* Group sales for the year were $466 million, down approximately
1 per cent on the previous year. This sales result was largely affected
by weaker trading in the men's categories and higher levels of markdowns.

* Earnings before interest and tax of $48.4 million represented a
22 per cent decrease on the previous year.

* Net profit after tax was $35.6 million, a 19 per cent decrease
on the prior year. This included profit on sale of the group's Melbourne
office building, contributing $5 million before tax.

* The total fully franked dividend for 2005/6 was 64c per share,
including a 40c fully franked special dividend.

"The board and management accept full responsibility for the
downturn in the company's profits and we are determined to recover and
grow value for shareholders," the chairman told shareholders.

Mr Gibson summed up that directors were working on ensuring an
improved profit result in future.

BACKGROUND
**********

Colorado Group Ltd was listed on the Australian Stock Exchange on
December 9, 1999.

It is a leading national footwear and apparel retailer and
wholesaler, with an Australian heritage dating back over 140 years.

The company operates more than 430 stores in Australia and New
Zealand. The group's portfolio of leading brands include Colorado,
Mathers, Williams, Pairs, Jag and Diana Ferrari.

Colorado Group's vision is to develop a team of motivated people
successfully working together to give customers a great experience.

Around Australia and New Zealand the company's employees are
passionate about Colorado's customers and brands, the company claims.

Colorado Group continues to attract and nurture talent, by
creating new opportunities for its people and celebrating successes.

In line with Colorado Group's culture the company actively
invests in up-skilling its staff to grow in line with the company.

In 2004/5 Colorado initiated the "In the Know" program which is
focused on the development and career progression of assistant managers.

This has propelled investment in increasing the depth of skills
required at every level of the organisation to maintain its expanding
growth position.

ENDS