Specialty Fashion Group (SFG) has revealed its reinvigorated direction, bolstered by strong half year results and the “successful” integration of Rivers into the fold.
The company, which salvaged the Rivers brand in November 2013, ended the half year in a solid financial position, with net cash of $22.6 million at December 31, 2013.
A discount on the Rivers acquisition of $4.6 million and costs in relation to the acquisition of $1.3 million are reflected in the EBITDA result for the half, according to SFG.
Commenting on the progress of the 28-year old Rivers brand since SFG snapped it up, the company said the integration of Rivers into the group progressing well.
“The focus in the month after the acquisition was to maximise trade during the Christmas period,which was successfully achieved through changes in the brand’s inventory management and promotion tactics. We anticipate that Rivers’ buying, planning and marketing teams will be fully integrated with the Sydney operations within six months.”
SFG CEO Gary Perlstein added that the strong balance sheet has also allowed the company to implement its recent investment strategy which reflected the opening of 52 new stores, including several outside of Australia.
During the half the group opened six Autograph and Crossroads stores in New Zealand, and its first City Chic store in South Africa.
“The group continues to have strong operating cash flows and is well positioned to continue the stated strategy of investing in our brands, new stores and business improvement processes.
"In addition to funding our investment program, strong cash flows and a successful strategy of aggressive promotions to clear Rivers’ old inventory also allowed the group to immediately reduce the utilisation of the working capital facility we obtained at the time of Rivers’ acquisition.”
Millers, the group’s largest and most mature brand has also evolved since a significant investment program to rejuvenate the brand was initiated nine months ago.
The company said the investment program has included the recruitment of a highly experienced leadership team that has been tasked to upgrade every facet of the brand’s operations.
However, additional costs of $2.6 million to support this strategy were incurred during the half.
“The return from these investments is starting to be realised; since December, Millers has experienced positive comparable store sales growth and higher margins,and further growth is expected over the remainder of the year.”
SFG said it has also made moves as part of its long-term strategy to be an omni-channel retailer.
The group’s online sales grew to$14.2million for the half year, or 4.4 per cent of total revenue – an increase of 26 per cent on the previous corresponding period.
Email-valid customer members grew to 3.1 million during the half, which takes the group’s total customer membership database to more than seven million members in total.
The company said further growth is also expected over the coming months, following the introduction of “click &collect”and iPad rollouts to all stores in the past six months.
SFG also reiterated that, going forward, it will also be focused on assessing and pursuing new store opportunities beyond Australia.
SFG currently operates a physical store portfolio of 1091 stores, following the opening of 52 new stores and closure of six stores during the half year, as well as the addition of 159 Rivers stores.
As reported on ragtrader.com.au, SFG had previously cast a dim outlook on the coming year, following zero sales growth for the first quarter 2014.