Specialty Fashion's online focus pays off
Market watch top headlines
Speciality Fashion Group's focus on growing its online sales has paid off, with the retailer almost tripling its first half profit.
The company reported a net profit of $17.97 million for the six months to December 31, significantly higher than the $6.16 million made in the previous corresponding period.
The result sent Specialty Fashion shares soaring, closing 7.5 cents, or 7.89 per cent, higher at $1.025.
The company said it had achieved the improved result mainly because if its focus on internet sales.
"Despite the challenging economic and retail market conditions throughout the half year, Specialty Fashion Group achieved a turnaround in its financial performance through sales growth and margin expansion, largely as a result of aggressively pursuing online sales growth, improvements made in its supply chain and minimising inflation of its costs of doing business," the company said in a statement.
It delivered earnings before interest taxation depreciation and amortisation of $37.2 million, which was in line with the guidance the company provided on January 25.
Specialty Fashion declared a two cents per share interim dividend for its shareholders.
It also expects an improved trading performance in the second half compared to the same period last year.
"The strategic initiatives in relation to eCommerce, customer relationship management and the supply chain are expected to continue to be the key drivers of improvement in performance," the company said.
"However, the company remains cautious as to the extent to which macroeconomic factors, both in Australia and abroad, may adversely influence consumers propensity to spend on discretionary items."
While the retailer said it would continue with its plan to close underperforming stores, it now expects to open new stores as rental market conditions have improved in some areas.
Options Xpress analyst Ben Le Brun said Specialty Fashion had done well in a tough climate and the market was impressed with its internet sales.
"I think the market was quite surprised by a couple of things the company had to say, specifically the success in their online sales and it liked that it seemed quite well leveraged for a turnaround in consumer confidence later in the year," he said.
City Index analyst Peter Esho said the result was at the higher end of expectations, the dividend was encouraging and the investment in online was a positive.
"It's good to see a retailer being proactive," he said of Speciality Fashion's online focus.