FASHION RETAILER'S TAKEOVER IN DOUBT AS PROFIT CLIMBS

FASHION RETAILER'S TAKEOVER IN DOUBT AS PROFIT CLIMBS

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

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

How communications technology can raise the bar on customer service, employee experience
Partner Content
From capturing feedback early to providing messages with a higher rate of cut-through, ...
Advertisement

Related Stories

EML Payments awarded $320m government contract to help stimulate the Spanish arts sector

EML Payments awarded $320m government contract to help stimulate the Spanish arts sector

Global payment solutions business EML Payments (ASX: EML) will play...

Microbio goes public as med-tech tackles condition that causes 11 million deaths per year

Microbio goes public as med-tech tackles condition that causes 11 million deaths per year

Brisbane-based medical technology company Microbio has stepped...

Available anywhere and everywhere: Lifestyle brand The Somewhere Co. targets global expansion

Available anywhere and everywhere: Lifestyle brand The Somewhere Co. targets global expansion

Despite a difficult few months for everyday wares outfit The Somewh...

G'day space: Australia is "go" for launch

G'day space: Australia is "go" for launch

Just after midnight on Monday 27 June, above the vast wilderness of...