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| Specialty Fashion could axe 120 stores |
   
Posted Date: 18/01/2012
By Inside Retail
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."
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Friday, March 09, 2012 by Anonymous
It comes down to their marketing. Pitiful, and they deserve what they get.
Wednesday, January 25, 2012 by Michael
What costs are you talking about Scott?, all the Landlords costs are part of outgoings which are paid by the tenants. Some Landlords which I will not name also double dip in outgoings by charging both wages and management costs. Scott can you please tell me which country has the highest retail rents in the world?
Monday, January 23, 2012 by Scott
Love how everyone gangs up on the landlords and blames them for their problems... the reality is retail groups like SFG are far bigger than most landlords - they have far more bargaining power and usually end up holding a gun to the LL's head when it comes to lease negotiations, not the other way around.
The reality is everyone is there to make a buck - the landlord is providing a good too (space), and has costs to meet just like any retailer.
Thursday, January 19, 2012 by MICHAEL
I agree with all three of you, how about the productivity commision and the Government be forced into making some changes because a lot of Landlords are getting away with fraudulent activity while consumers who have no knowledge of what happens in the shopping centre industry blame retailers for poor service and high prices.
Thursday, January 19, 2012 by Jane
Its not just center LLords.Strip LLs increase rents according to land /rate increases which are not linked to retail trading conditions just investment values of land. Many LLs then believe that tenants should fully fund their odraft fees as well as all other ohead increases. Perhaps the cycle will hit all LLs when the omnichannel emphasis leans more heavily to non bricks and mortar. Same as wages/conditions in Aust. rent /sq metre is so expensive with all parties wanting perfect returns for every increase in effort. Problem is, the final consumer is not prepared to accept anything other than price decreases but wants added value in form of better service, quality of goods, retail experience etc. Makes our retail/wholesale equation very tricky & uncompetitive vs the world.
Thursday, January 19, 2012 by Miles John
Would you love to be able to lock your customers into paying 5% more each and every year and then demand they contribute to the capital improvements of your store. Why your there why not ask them to contribute to your advertising costs.
Wednesday, January 18, 2012 by HIS
When oh when are the Landlords going to become realistic with the Rentals being charged in a depleated market.
My Landlord tells me my rent is cheap.
It was reasonable when I signed my Lease 2 years ago, but with the drop in Centre traffic flow and thus my sales it is no longer viable - like many other of my co-tenants.
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