The Rivers clothing brand is bleeding money for its new owner

Models at the City Chic fashion show in Sydney. Photo: Lisa Maree Williams/Getty Images

Losses from the Rivers brand will cut full year earnings by half at the Specialty Fashion Group.

The Katies and City Chic stores operator today issued a profit warning says its EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation) for 2015 will be between $20 million and $21 million.

This includes a loss of $21.6 million attributable to Rivers, the warehouse-style clothing retailer the group bought in 2013.

CEO Gary Perlstein says performance, excluding Rivers, has been strong.

“We are beginning to see encouraging improvements in Rivers and believe that the worst is now behind us,” he says.

“However, we acknowledge that there is still much work to be done to return the brand back to profitability.”

The company is confident Rivers will become profitable in 2017. Part of the turnaround has been to sell off excessive stock using aggressive discounting and promotions.

Full year audited results will be released later this month.

Specialty Fashion Group shares are up 1.72% to $0.58.

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