Clothing retailer Specialty Fashion says its troubled Rivers stores won't be profitable for at least another 12 months, after the group suffered a $4.5 million full year loss.
The company behind brands such as Katies, Millers and City Chic almost halved its full year earnings, dragged down by aggressive discounting from Rivers as it clears the way for new products.
Earnings before interest, tax, depreciation and amortisation declined 48 per cent to $20.3 million in 2014/15 as Specialty took a $21.6 million loss from Rivers.
But chief executive Gary Perlstein says a turnaround is now in sight.
"Rivers, whilst a disappointing performance for this financial year, the worst is now behind us," Mr Perlstein told AAP.
Mr Perlstein expects Rivers to contribute to the group's profitability in the 2017 financial year, and in anticipation he plans to roll out new stores this financial year.
He said company margins were hit when Rivers liquidated 8.6 million units of old stock that were "blocking the arteries" of the clothing and footwear brand.
But, during the year, Specialty's comparative sales, which strips out the effects of store openings and closures, grew 5.3 per cent excluding Rivers.
That's despite there being no signs that historically low interest rates and lower petrol prices had increased discretionary spending in the fashion market, Mr Perlstein said.
"When we talk to our customers, we're not hearing a great degree of positivity or buoyancy," he said.
Specialty did not declare a final dividend and said returning Rivers, which it acquired for just $3.6 million in 2013, to profitability remained a priority.
Specialty's shares rose half a cent to 58 cents.
RIVERS DENTS SPECIALTY'S EARNINGS
* Sales revenue of $792m, up 15.5pct from $685m in 2013/14
* Net loss of $4.5m, down from a $12.5m profit
* No final dividend
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