Specialty Fashion could axe 120 stores

Retailer Specialty Fashion Group says its Christmas 2011 sales were down on 2010 and warns if the retail trading conditions don't change it will cut back its 900-strong store network.

SFG operates the La Senza, Millers, Katies, Crossroads, Citi Chic and Autograph chains.

After announcing Wednesday that its comparable store sales in the half year to December 31 were down 4.5 per cent and revenue of $307 million fell 0.5 per cent, executives warned of harsh restructuring measures.

One news organisation quoted an unnamed SFG source saying up to 120 of its stores would close over the next three years if conditions do not improve. This would most likely be achieved by not renewing leases as they came to an end.

The company has forecast earnings of $21 million to $22 million for the six months, down 38 per cent. Any store reduction program is likely to go hand in hand with an online expansion strategy. "Additional channels now exist for our brands to expand their presence, and our investment hurdles for bricks and mortar stores are higher than previously adopted," said CEO Gary Perlstein. "Importance will be placed on the strategic position of certain locations to support the group's omnichannel business strategy," he said.

But while the outlook is grim, the company was pleased with its response to the challenging market.

"Given that this is the toughest retail environment we have seen, Specialty Fashion Group has performed well," Perlstein said in a statement. "In spite of recent reductions in the cash rate, industry-wide discounting has continued, but our investments over the past three years meant we protected gross margins."

By: Inside Retail

18/01/2012

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