Specialty Fashion Group Limited (ASX:SFH)

Specialty Fashion Group Limited is a retailer of women's fashion in Australasia. The Company's brands included Millers, Crossroads, Katies, Autograph, City Chic and Rivers. Its Millers brand operates approximately 350 stores. Recently, the Group successfully completed the sale of the Millers, Katies, Crossroads, Autograph and Rivers businesses to Noni B Limited and the Company will use the sale proceeds to strengthen SFH’s balance sheet by paying down debt and will enhance the Group’s cash position to support City Chic’s growth plans.

Further, the Company confirmed that its existing external funding liability has been agreed which will result in the bank loan facility reducing from $22 million to $15 million from 1 July 2018. The Group reported a revenue of $399.0 million for six months period ending on 31 December 2017 (31 December 2016: $430.0 million) and the Group ended the half-year with net cash of $21.3 million at 31 December 2017 (compared with net cash of $12.3 million in the prior half-year). It was observed that the group was witnessing a heavy sell-off last year because of which investors’ confidence got shaken away and lead to negative sentiments in the market but the Group’s plan of offloading of five retail brands to Noni B Limited made the market bullish again. The Group is offloading all of its portfolio except City Chic and the divisions are already in losses so now Group might turn to be a profitable retail outlet after this divestment transaction.


Store Movements and Locations of its Brands (Source: Company Reports)

The stock price has been rising up since it has been listed (was up by 134.57 per cent in last three months as on 16 July 2018). As of now it is trading well in US market via its website or dropship through US trade partners like Macy’s and Amazon, but the retailer can face a threat from the US-Global trade war. The stock price climbed up by 1.05 per cent and closed at $0.96 as on 17 July 2018. The stock is trading near its 52-week high price that is $1.08. Further, there is already a lot of competition from Amazon and other competitors in the sector, so one can keep a watch on this stock and look for a better buying opportunity.

 
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