AS RETAILERS hope post-Christmas sales erase memories of a terrible year, Naomi Milgrom's Sussan Group has quietly posted a bumper profit.
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.
Frequently Asked Questions about this Article…
What profit did Sussan Group (ARJ Group Holdings) report for the year to the end of July?
ARJ Group Holdings, the company behind the Sussan, Sportsgirl and Suzanne Grae chains, reported a profit of $28 million for the financial year to the end of July — roughly double its result from the previous year.
How did Sussan Group boost profit despite weak retail conditions?
Sussan boosted profit mainly by cutting operating costs — about $13 million (6.25%) — and by lowering dividends and finance expenses, which also helped increase cash in the bank.
What were ARJ Group’s revenue trends and has it recovered from the 2008–09 slump?
Revenue grew just 0.95% to about $500 million year-on-year. The company has not yet made up the roughly 7% slump in revenue it experienced at the height of the 2008–09 global financial crisis.
Is Sussan Group financially stable — what do its current assets and liabilities show?
The annual report shows current liabilities exceeded current assets by $5.7 million. The accounts note the business remains a going concern because about $6 million of those liabilities relate to lease incentives and deferred loyalty program income expected to be collected in the following year.
What happened to Naomi Milgrom’s dividend from Sussan Group?
Naomi Milgrom’s dividend was cut again — it fell from $6 million to $1 million in the latest year. For context, she received $28 million in 2008.
What post-Christmas discounting strategies has Sussan Group used to drive sales?
Sussan Group has offered heavy post-Christmas discounts: Suzanne Grae advertised up to 70% off, while teen-focused Sportsgirl cut sale stock prices by an extra 30% to attract budget-conscious shoppers.
How large is Sussan Group’s retail footprint and who owns the business?
Sussan Group runs about 550 stores in Australia, employs more than 4,200 people, and remains a private company controlled by Naomi Milgrom, who is the sole director and bought the business from members of the Besen and Gandel families in 2003.
What key risks should everyday investors watch in Sussan’s results?
Investors should watch continued weak retail conditions (several rivals have warned of lower profits), modest revenue growth, the shortfall where current liabilities exceeded current assets, and margin pressure from heavy discounting — balanced against stronger cash levels from cost cuts and lower finance costs.
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