Specialty Fashion Group to cut over 300 stores
At the company’s Annual General Meeting yesterday, shareholders voted against the retailers remuneration report, with 51.78 per cent against adoption resulting in a “first strike” that will culminate in a board spill should there be a protest vote again next year.
Over 34 per cent of shareholders also voted against the re-election of director Michael Hardwick who is also chief financial officer at rival fashion chain Cotton On Group (COG).
Despite SFG seeing an improvement in underlying EBITDA for FY17, the owner of brands including Katies, Millers and Riverse also reported an after-tax loss of $8.4 million, after accounting for one off costs of $8.8 million.
After battling challenging trading conditions in the first quarter of the new financial year, the company advised the market in mid-October that expectations for underlying EBITDA in FY18 would be lower than FY17 and in the range of $14.0 to $20.0 million.
“Whilst SFG has made strong progress on a number of operational issues, including completion of the successful implementation of a new e-commerce platform to maximise multi-channel migration, we are accelerating our speed in implementing the business improvement program in the face of continued market challenges,” said SFG chairwoman Anne McDonald.
SFG will turn its focus to trimming its store footprint, with loss making stores on ‘hold over’ leases to be culled to reach the target of “an optimised store network of around 700 stores in 2020 compared to the current 1,000 plus stores.”
McDonald commented that the takeover bid from Al Alfia earlier this year had “required considerable time and focus” and affirmed the proposal did not result in an offer capable of being put to shareholders due to unexpected issues on Al Alfia’s side.
“We have re-engaged our search for additional non-executive Directors and during the next 12 months we aim to complete this stage of board renewal,” she said.
“As part of board renewal, Ashley Hardwick has advised he will not stand for re-election as a director of SFG at the next AGM. This is to align the NAAH [SFG’s largest shareholder and COG founder Nigel Austin’s private company] group’s board representation more closely to that of its shareholding.”
Outgoing CEO Gary Perlstein, who is retiring after 14 years in the role, said online sales now account for 10.4 per cent of total revenues and “continue to grow at impressive rates across all brands,” supported by newly launched e-commerce platforms.
“Our online growth reinforces our view that a critical pillar to the success of online sales is an integrated physical store and online experience and presence,” he said.
“Our CRM platform has in excess of 9 million members, which includes an email base of more than 5.5 million customers who we regularly communicate with. Connection with customers is core to our success, and we continue to work hard every day to improve and strengthen this.”
As a significant investor in SFG, I am a believer in the long-term opportunities for the business and I look forward to working with the board and the management team to ensure a seamless handover.”