Specialty Fashion shares plunged yesterday after it confirmed that a $135 million indicative takeover proposal from Al Alfia Holdings, an investment company controlled by the Qatari royal family, was unlikely to proceed.
Chief executive Gary Perlstein said yesterday with the company’s 2016-17 results, that there had been no active discussions with Al Alfia since February, when Specialty Fashion warned that funding for the proposed 70 cents a share offer had been caught up in a probate issue following the death last October of Sheikh Khalifa bin Hamad al-Thani.
After touching 65.5 cents in February when the Al Alfia offer was revealed, Specialty Fashion shares have fallen back to 45.5 cents. They slid 23% yesterday to 35 cents. That is sharply lower than the 55 cents the shares had been trading at before the supposed bid emerged.
Adding to the negativity about Specialty Fashion was the news that it lost $8.4 million in 2016-7 after closing stand-alone City Chic stores in the US and weak sales at key brands including Millers and Katies.
The $8.4 million loss included more than $6 million in store exit costs and write-downs in the US and compared with a net loss of $2.2 million in 2015-16.
There’s no dividend again for shareholders. the company last paid one in 2014.
Group sales slipped 2.1% to $808.9 million as same-store sales fell 2%. Underlying earnings before interest tax depreciation and amortisation rose 6.6% to $26.7 million, indicating that the company lost $3.7 million in the June-half, even though Rivers made its first annual profit in three years.
Mr Perlstein said in yesterday’s statement “This is an overall solid result with an increase in underlying EBITDA and stronger balance sheet. Our clear focus in the year was the turnaround of Rivers to a profitable brand, and we successfully achieved this.”
He said City Chic was also a standout, continuing its positive trajectory both locally and internationally.
The company blamed a combination of fragile consumer confidence and low wage growth for ongoing weak consumer spending and Mr Perlstein said the heavy promotional activity, that had dented the group’s trade in July, to continue.
“The group has proven agility in navigating challenging trading conditions and will continue providing great value to our customers whilst maintaining strong margin and cost discipline," he said.
Online sales were up 15% to $83.7 million and now accounted for 10% of the group revenues.
The company closed 79 stores in the year, offsetting 30 new stores and taking its network to 1,043 in Australia, New Zealand, USA and South Africa -14 of which are concession stores in Myer.
