Retail giant Specialty Fashion Group (SFG) has cast a dim outlook on the coming year, following zero sales growth for the first quarter 2014.
The company, whose brands include Millers, Katies, Crossroads, Autograph and City Chic, cited a lull in consumer confidence for the lacklustre first quarter results of the current financial year.
“We’ve seen no positive influence from consumer confidence since the Federal Election, and we were not able to achieve sales growth in the first quarter of the current financial year. It is hoped that the political certainty will restore consumer confidence.
“Given the importance of the next two month’s trade to our business, we are unable to provide an estimate of either sales or profit for the first half of the financial year at this stage, however if the sales trend does not significantly improve in the second quarter we will not be able to match our first half profit performance of the 2013 financial year.”
Commenting on the company's progress in the past year, SFG chairman Geoff Levy said that its supply supply chain and cost and risk management have been key areas of focus.
“One of the key areas of focus over the past year has been further improvement of our supply chain. We have developed sound relationships with suppliers throughout the South East Asia region that can produce quality product for our brands at a competitive price,” he said.
“We have also been focused on managing business risk, with a particular focus on how we contain our costs. Over the past few years, input prices have been quite volatile, and any cost increases have been difficult to pass on to customers who are accustomed to retail price deflation.”
SFG has also closed seven stores over the past 12 months, with the company currently operating 886 stores.
Going forward, Levy said that SFG will continue to monitor its store portfolio for under performing stores and will close those stores where landlords are “unwilling to give meaningful rental reductions where appropriate”.
SFG CEO Gary Perlstein echoed Levy's sentiments and said that reduction in base rentals of renewed leases has been a cornerstone for the company's cost recalibration.
“The property landscape has changed with the drop in demand for new store sites by most retailers. We don’t see this situation changing for some time and we will continue to pursue rental reductions as our leases approach renewal, or alternatively rationalise our under-performing stores where no alternative exists.
“It is vital that we only operate stores that can operate profitably in a deflationary retail sale price environment when wages and rentals remain inflationary.”