Specialty Fashion shares gain on 66pc upgrade to profit forecast
Posted by Lucky on Jan 6, 2010
SHARES in Specialty Fashion Group surged almost 10 per cent today after the retailer upgraded its first-half 2010 profit guidance as much as 66 per cent to between $37 million and $39m.
Australia’s largest women’s clothing retailer had forecast profit of between $24m to $30m on November 25 when queried by the stock exchange on an 18 per cent surge in its stock price.
SFH shares were trading higher by 13.5 cents, or 9.61 per cent, at $1.54 today.
Sales for the six months to December 31 rose 11.5 per cent year-on-year to $318m, with comparable store sales up 8.9 per cent despite “tough Christmas trading conditions”.
SFH chief executive Gary Perlstein blamed the tough Christmas conditions on heavy discounting, echoing the feelings of Myer chief executive Bernie Brookes and JB Hi-Fi’s Richard Uechtritz.
“Christmas 2009 trading was more challenging than in 2008, with the discounting in the market being more aggressive than we have seen for many years,” Mr Perlstein said.
“This may be the first indication that there will be more difficult trading conditions in the second half (of 2010), when consumers will not be receiving government handouts and interest rates are on the rise.”
SFH’s swag of brands includes the Katies, Millers and Crossroads labels, and the company operates 840 stores around the country.
Retailers are expecting strong sales to continue in 2010 after promising results so far this financial year and overall positive Christmas trade despite the absence of government stimulus cash.
Myer has maintained guidance for sales growth of 3 per cent, and JB Hi-Fi has tipped sales to grow 20 per cent to $2.8 billion.
JB Hi-Fi CEO Mr Uechtritz said his stores had experienced strong sales volumes on Boxing Day and second-quarter sales were ahead of the same period a year earlier.
Access Economics expects $14.73bn will be spent between Boxing Day and January 15, up 3.3 per cent from a year earlier.
The Australian Bureau of Statistics will next month issue retail sales data for December, as major retailers including David Jones and Woolworths report sales results for the second quarter.
The Reserve Bank board also meets in February after a rest in January, and economists tip that by the end of 2010 the central bank would have raised the official cash rate from 3.75 per cent to at least 4.75 per cent.
Retailers are hoping that continued low unemployment – which has failed to break the 6 per cent mark – and a stockmarket recovery will underpin consumer confidence.
SFH’s profit upgrade is good news for CFO Alison Henriksen, who took over from Howard Herman on August 31 last year.
It’s also promising for National Australia Bank, which on November 4 again became a substantial holder in SFH with 5.6 per cent, after having dumped a substantial stake on October 22.
Investment bank Lazard has been steadily reducing its holding in SFH to 7.6 per cent since October 23.
SFH said the profit upgrade was “preliminary in nature”, with the first half-results to be released on February 23.
source:http://www.theaustralian.com.au/business/industry-sectors/specialty-fashion-shares-gain-on-66pc-upgrade-to-profit-forecast/story-e6frg9h6-1225816579636
