The Specialty Fashion group, Australia’s largest specialty retailer of women’s fashion, squeezed more profit from its stores despite a weak Christmas and a fall in sales over the six months to December.
The owner of Millers, Katies, Crossroads, Autograph, City Chic and Rivers, today posted a 36.8% increase in half year profit to $12.1 million.
The result was despite sales revenue falling by 1% to $430 million. Comparable store sales fell 2%, while the gross margin improved by 1.9 percentage points to 58.0%.
A short time ago, Specialty Fashion shares were down 2.3% to $0.625.
Other fashion retailers have been reporting a subdued Christmas. Earlier this month fashion labels Marcs and David Lawrence went in to voluntary administration, citing deteriorating sales, general market conditions and poor cash flow.
“This is a hard fought result, achieved in a difficult and volatile Christmas trading environment,” says Specialty Fashion CEO Gary Perlstein.
“Our strategy of continuous business improvement to deliver profitability growth is working.
“While sales revenues were slightly down, margin improved due to better markdown management and holding the overall cost of doing business flat.”
Specialty Fashion also reported the apparent collapse of a possible takeover by Middle Eastern investment company Al Alfia after a death in the family of the owners. The plan had been to privatise the company at 70 cents a share. The shares last traded at 64 cents.
Perlstein says the turnaround of warehouse-style clothing retailer Rivers, which Specialty Fashion bought in 2013 and has been losing cash ever since, is on track.
“While we feel the worst is well behind us, we will not be complacent in our focus and drive to ensure this improvement continues,” he says.
“We remain confident Rivers can maintain its growth momentum and achieve a much improved result this year.”
The company didn’t declare a dividend.