Specialty Fashion Group (SFG) operates a number of retail chains including Katies, Millers and City Chic.
Despite continuing troubles with its Rivers brand, the Group has a three pillar strategy for growth.
This includes a rejuvenation of existing brands, the transformation of Rivers and measured expansion in markets beyond Australia.
Millers Brand Rejuvenation
Millers continues to be the Group’s largest and most mature brand, with a recent rejuvenation program across every facet of the brand’s operations.
SFG said the brand delivered positive CSG and higher margins throughout the year, supported by a strong trading performance during the Mothers’ Day period.
During the year 12 existing sites were rebranded into a new Millers design concept.
This is expected to continue in FY2016, with a further roll out of the new Millers store design concept, the opening of new stores and increased online sales.
Overall, The Group’s total physical store portfolio comprised 1,086 stores at 30 June 2015, following the opening of 29 new stores and closure of 38 stores during the year (net decrease of 9 stores).
City Chic’s Expansion into the USA and South Africa
City Chic’s USA wholesale business currently sells into 60 Nordstrom stores across the USA.
The brand has also commenced a trial of a small range of product into Macy’s.
SFG will continue to assess further site opportunities to augment its current seven stores in the United States and two stores in South Africa.
City Chic has experienced significant growth in online sales in Australia and the USA.
The continued growth of international online sales will remain a key focus for the brand during FY16.
Overall, the Group’s digital sales grew to $51.2 million for the year, representing 6.5 per cent of total revenue, an increase of 64.0 per cent or $20.0 million on the previous year.
Rivers’ Brand Transformation
When acquired for for $3.6 million in 2013, Rivers was a business that had been adversely affected by aggressive discounting, excessive marketing expenditure and significant levels of inventory accumulation.
The Group was aware of these issues and the challenges they presented, and throughout FY2015 we have implemented strategies to address these issues and turn the Rivers business around.
However, when compared to our expectations at acquisition, some of these strategies have taken longer than initially anticipated to have a positive impact on Rivers’ profitability.
While SFG successfully liquidated inventory inherited on acquisition in half the expected time frame, this had a negative impact on margins during the year.
The Group expects the brand to hit profitability in 2017.