Womenswear retailer Specialty Fashion Group (SFG) has predicted full-year earnings will be slashed by half this year, compared to 2011 figures.
The company, responsible for brands such as Katies, Millers and La Senza, said earnings before interest, taxation, depreciation and amortisation (EBITDA) for 2012 are expected to be within the range of $21 million to $22 million - nearly half the $40.6 million posted the previous year.
Revenue for the full year is predicted to total $573 million, with comparable store sales down 3.4 per cent on the prior year, according to recent guidance for the full year ended June 30, 2012,.
Revenue for the six month period was $265 million, 1.4 per cent higher than revenue from the group for the second half of the prior year, due to new store growth in prior periods.
However, comparable store sales for the half year declined, 2.3 per cent lower than the second half of 2011.
As previously reported in ragtrader.com.au, the group's planned cuts to its store portfolio have gone also ahead during the period, with its store base decreased to 893 stores, following the opening of five stores and closure of 21 stores during the second half of the year.
However, the group's online sales for the second half of FY12 have tripled in comparison to the same period in FY11, growing to $15 million for the full year, or 2.6 per cent of total revenue.
Commenting on the guidance SFG CEO Perlstein said the 2012 results are indicative of the difficult retail climate, however, there is still room for improvement in certain areas such as online.
“Industry-wide discounting remains unchanged and the reductions in the cash rate have had little effect on consumers' discretionary spending, however the opportunities to innovate and enhance the omni-channel experiences for our customers are exciting.
“Some tailwinds are expected with respect to the containment of product costs and some other costs of doing business, and we are very focused on recalibrating the group to ensure the company thrives in an industry that is undergoing permanent structural change,” he said.
“While group revenue has been impacted by the difficult retail environment, the company has successfully made progress in leveraging its customer database, with online revenue growing materially and expected to contribute to revenue and profitability in future years.”
Going forward Perlstein said online will be a key focus, with the company focused on achieving its target of 15 per cent of sales from online within three years.
"Our customers are enjoying their online shopping experiences, and there is significant potential for further growth in online as we migrate more of our solely in-store customers to become omni-channel shoppers,” he said.
However, the increased investment in online is set to impact on the company's retail network.
In a statement to market, SFG said that while the company has been able to negotiate a decrease in rent for some stores, the group intends to continue to take advantage of the opportunity to reduce its costs of doing business in a high retail rental environment through further store closures or recalibrations in store size, as online revenue becomes an increasingly important component of the business.
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