SYDNEY: Specialty Fashion Group has fallen prey to a downturn-induced contraction of the womenswear sector, reporting a dramatic drop in profits.
Announcing its results for the half year to December 31 2008 yesterday (February 17), the company - whose stable of brands includes Autograph, City Chic, Crossroads, Katies, Queenspark and Millers - reported a 21.6 per cent fall in first half profits.
Revenue fell 1.3 per cent to $285 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell 14.9 per cent to $30.5 million.
CEO Gary Perlstein said weak consumer sentiment meant sales fell across all of its six brands and were "up and down" in January and February.
"We are aware that discretionary spending will continue to be influenced by macro economic factors that are beyond our control and not possible to predict with confidence in the current environment."
Meanwhile Specialty would continue to implement cost cutting initiatives, after cutting about 10 per cent of its office support staff in the first half of 2008/09.
"We've already made tough decisions, we're already three to four months into the recalibrations of our business to ensure that we are well prepared - it's been across all the various expense lines," Perlstein said.
On the progress of its business improvement program, Project Revitalise, Perlstein said the initiatives had been slowed down due to softer economic conditions.
However, gross margins rose 130 basis points to 57.6 per cent in the first half, reflecting the positive impact of the program.