Is this a last gasp attempt to remain in the game?
Specialty Fashion Group (SFH) shareholders yesterday heard dramatic plans to keep the specialty retailer in business by closing around a third of its stores in the next three years and cutting the number of its various chains.
The restructuring follows the shock warning last month that December-half earnings were expected to fall by half.
SFH owns Katies, Rivers, City Chic, Millers Fashion Club, Autograph and Crossroads.
SFH shares have shed 80% of their value over the last five years, falling 2.5% yesterday to end at 19.5 cents, the lowest level since 2009.
News of the restructuring and last month’s downgrade saw shareholders take out their frustration on the board and deliver a massive first strike against its remuneration report, with 51% of votes lodged before the annual meeting in Sydney voted against adoption of the report.
Shareholders also delivered a strong 65% protest vote against the re-election of Michael Hardwick, the chief financial officer of Nigel Austin’s Cotton On Group, and forced his cousin Ashley Hardwick, also a Cotton On director, to offer to step down before the next annual meeting.
The profit warning came after a worse than expected $8 million loss in 2016-17 and a mooted takeover offer from Al Alfia Holdings, an investment company controlled by the Qatari royal family, which never got past a statement.
The anger about Mr Perlstein was pretty pointless because he resigned last week after 14 years as CEO and 24 years at the company he co-founded.
He told the meeting the reduced guidance took into account costs associated with closing more than 100 of the group’s 1019 stores this year.
SFH plans to close 300 stores on "hold over" leases by 2020, reducing its footprint to about 700, while accelerating investment in e-commerce.
Mr Perlstein said 159 of the 300 stores slated to close were losing money despite attempts to reduce rents and cut costs. Most of the loss-making stores are under the Crossroads and Autograph stores.
Chair, Anne McDonald told the meeting “We continue to pursue cost management initiatives and business simplification by integrating shared service functions into the brands. In the first quarter of the 2018 financial year, we have reduced costs by around $3.6 million through a leaner support office.”
