IN the thick of takeover talks, Specialty Fashion Group (ASX: SFH) worked hard to cut costs and see its bottom line benefit for the half year to December.
The owner-operator of brands including Rivers, Katies, Crossroads and Millers welcomed a profit rise to $12.1 million, an increase of 36.8 per cent on the $8.8 million achieved in the prior corresponding period.
This is despite sales revenue declining 1 per cent to $430 million.
Rivers saw a turnaround though, trading profitably on an EBITDA basis.
Specialty Fashion Group CEO Gary Perlstein describes the result as 'hard fought'. The retail business opened 28 new stores during the period and closed 25 'due to store rationalisation'.
"This is a hard-fought result, achieved in a difficult and volatile Christmas trading environment," says Perlstein.
"Our team has once again shown agility and grit to deliver improved performance."
Despite fewer sales, Perlstein says 'markdown management' and 'holding the overall cost of doing business flat' improved margins.
The group has been in talks with Middle Eastern investment firm Al Alfia regarding a potential transaction. It reports due diligence for this has now been completed.
However, with the recent passing of the father of Al Alfia's sole shareholder, the 'funding has been temporarily restructured in probate'.
Al Alfia advises it's addressing the probate issue but can't confirm when this will be resolved.
Looking forward, Perlstein says his company will focus on its standalone strategy. It identifies Rivers as a growing, profitable brand, and is also focused on the expansion of the City Chic brand both in Australia and abroad.
Perlstein says Specialty Fashion Group is targeting those 'often overlooked by fashion - the older and plus-sized segments'.
The company has engaged these segments online, with its online sales up 28 per cent on a comparative period basis, and online sales now accounting for 10.6 per cent of total sales.
Following a statement about the potential takeover now being in question, Specialty Fashion Group began trading down. By mid-morning, the company's shares were trading at 61c, down more than 5.4 per cent.
Business News Australia
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