Sussan profits from price and cost cuts

ARJ Group Holdings, the head company of the womenswear group that runs the Sussan, Sportsgirl and Suzanne Grae chains, has declared a profit of $28 million for the financial year to the end of July, double its result in the previous year.

But despite the impressive result, Sussan is feeling the effects of tough times in the retail sector that have forced rivals as diverse as Noni B, The Reject Shop and Billabong to warn of lower profits next year.

ARJ's company accounts, filed last month with the Australian Securities and Investments Commission, show revenue grew just 0.95 per cent to about $500 million and the company has a shortfall in current assets.

Ms Milgrom's dividend has been slashed for the second year running, falling from $6 million to $1 million. In 2008 she was paid $28 million.

Sussan has been unable to make good the 7 per cent slump in revenue it experienced at the height of the global financial crisis in 2008-09 but has boosted profit by cutting costs by about $13 million, or 6.25 per cent.

The company's annual report also shows that its current liabilities - payments due in the 12 months from July 31 - exceeded its current assets by $5.7 million.

But a note to the accounts said it remained a going concern because $6 million in liabilities was made up of lease incentives and deferred income from the group's loyalty program, which would be collected in the following year.

And cash in the bank has soared, rising from $36.9 million to $58.2 million at year's end, because of the cut in operating costs, Ms Milgrom's lower dividend and a drop in interest and other finance expenses.

In addition to tightening its belt, Ms Milgrom's group has joined the rest of the retail sector by offering hefty post-Christmas price cuts in a bid to prise open the wallets of budget-conscious consumers. Its line for mature women, Suzanne Grae, is offering 70 per cent off while teen-focused Sportsgirl has cut the price of stock on sale by an extra 30 per cent.

While it runs about 550 stores in Australia and employs more than 4200 people, Sussan Group remains a private company with just one director, Ms Milgrom. She bought it from her family, members of the Besen and Gandel retail clans, in 2003.