Retail giant Specialty Fashion Group (SFG) has revealed details of its internal struggles with the tough trading environment over the past 12 months, but flagged improvements for the year ahead.
As previously reported on ragtrader.com.au, the company, which operates brands such as La Senza, Millers, Katies and Autograph, reported a net loss of $2.8 million for the full year ended June 30, 2012, following a rough year in the market.
The loss and total revenue for the full year totalled $572.5 million, delivering earnings before interest taxation depreciation and amortisation (EBITDA) of $21.7 million.
SFG CEO Gary Perlstein attested to the company's uphill battle at its annual general meeting this month, and said 2012 has proven to be “another difficult year” for the group.
“The highly competitive environment has meant significant discounting, and this, together with higher rental and wage costs, are the main drivers behind this result. [However,] despite this challenging backdrop, the board and management has exercised caution during this period, saved costs where possible, and managed cash flow,” he said.
The group's performance in the online sector also improved – with sales reaching over 2.5 per cent of total revenue – as well as its customer database, which increased to 7.3 million memberships, of which 2.1 million have valid email addresses.
Commenting on strategies to tackle the year ahead, Perlstein said SFG has invested significantly in its design and production capability, both in Sydney and in Shanghai over the past few months, in an effort to differentiate its offering in the competitive market place.
In addition, he said its increased presence in China has also brought the group closer to its production base, improving the consistency of product quality and creating pricing transparency.
“We have also thoroughly reviewed our overseas suppliers thereby rationalising our supply chain, without creating any excessive dependencies on any one supplier. Despite the cotton crisis we achieved gross margin improvements of 50 basis points during the financial year. We are seeing the benefits from this focus coming through in the first few months of the financial year,” he said.
“Trading since July has been quite encouraging.”
However, despite the improvement, Perlstein confirmed that the group will remain cautious with the all important Christmas period still to come.
“We remain of the view that consumers are fickle, and susceptible to becoming more cautious if there are any economic or political shocks that occur in the near term. Given the importance of the next two months trade to our business, we are unable to provide guidance of either sales or profit for the first half at this stage.”