Mass exit from iconic brands hits Specialty Fashion Group

Mass exit from iconic brands hits Specialty Fashion Group

After selling the majority of its brand holdings to Noni B in May, Specialty Fashion Group's (SFG) (ASX: SFH) losses have worsened.

The group recorded a net loss after tax of $9.3 million, down further from its $8.4 million loss in FY17.

This result follows the divestment of key brands Katies, Millers, Crossroads, Autograph and Rivers to Noni B in May 2018.

Revenue dipped n 6.5 per cent to $752 million, while underlying earnings were also down from $26.7 per cent to $24 million for the financial year.

SFG CEO Daniel Bracken says FY18 was a period defined by necessary change.

"FY18 was a transformative year for the company, with the agreement to divest five of our six brands," says Bracken.

"The transaction provides the best possible outcome to our shareholders, significantly strengthens the balance sheet, and provides the ability to focus on the growth and development of our City Chic brand."

City Chic, the company's plus-size women's apparel chain, performed comparatively well compared to the group's other operations.

Sales revenue for City Chic was up 5.5 per cent to $131.9 million, with online sales now representing 36 per cent of total sales for the brand.

The brand's store network in Australia and New Zealand continues to trade strongly with a rollout plan for standalone City Chic stores underway.

During the period, SFG successfully exited City Chic's USA stores and South African operations.

Phil Ryan, general manager of City Chic, says the brand is promising for the future of the company.

"The strong results achieved by City Chic across both store and online channels were very pleasing and demonstrate its significant momentum and potential as a standalone business," says Ryan.

"We have invested in City Chic's online platform and expanded our online exclusive range, with a focus on enhancing customer experience at every touch point."

Despite deflated FY18 results, the company says sales have grown during the first seven weeks of the new financial year.

The company has also announced it intends to begin paying dividends again in FY19 considering the group's "strong cash position".

Shares in SFG are up 8.25 per cent to $1.05 per share at 10.33am AEST.

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