Losses at Rivers have halved, fuelling hopes that parent company Specialty Fashion Group will return to an annual profit.
Specialty Fashion expects Rivers will begin turning a profit in fiscal 2017 for the first time since it bought the discount retailer for $3.6 million in 2013.
While the price was considered a bargain, the group, which also owns women's fashion chains Millers, Katies, City Chic, Crossroads and Autograph, inherited a huge amount of old stock.
Aggressive discounting to clear the stock resulted in a $21.6 million loss for Rivers in fiscal 2015 which dragged the group into a $4.5 million full-year loss.
In a sign the business is turning a corner, Rivers' losses halved from $11.2 million to $5.2 million in the six months to December 31.
Combined with a 5.2 per cent lift in group revenue, including a 5.7 per cent jump in same store sales growth, Specialty's first half profit rose 50.6 per cent to $8.818 million.
Specialty Fashion chief executive Gary Perlstein says while he wasn't giving full year guidance, Rivers' better performance was encouraging.
"We are starting to see an improvement in the performance of Rivers because we have cleared all that old stock that was not selling and put our new product ranges in which is resonating with the customer," Mr Perlstein told AAP.
"We hope our run rate with Rivers' improvement will continue which will go a long way to help that outcome (returning to full year profit)."
He said the company was returning the quality back into Rivers apparel and shoes.
"The heritage of Rivers as a truly iconic brand was always around quality and comfort," he said.
"The shoes had soft inner-soles and the outerwear had double-stitching but that went away as the business purely traded on price.
"We have started putting all the quality and comfort back into the product."
He said customers had responded well to Rivers' new range with a continued lift in online sales, supported by a strong trend of repeat purchases by loyal rewards customers.
Millers, the group's largest brand which like Rivers targets mature aged shoppers, continues to perform well with solid same store sales growth and a significant increase in online sales.
Young women's clothing chain City Chic has continued its international expansion. It now trades in 90 Macy's department stores in the US on top of the 60 Nordstrom stores is was already operating in.
The result has impressed investors who drove Specialty's share price up 10.5 cents, or 20.19 per cent, to 62.50 cents at 1450 AEDT.
SPECIALTY FASHION ON TRACK:
* Net profit up 50.6pct to $8.818m
* Revenue up 5.2pct to $434m
* No interim dividend, consistent with a year ago.
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