A former Qatari ruler's death has thrown a $135 million takeover bid for Millers and Rivers owner Speciality Fashion Group into doubt.
Despite the company reporting a 37 per cent rise in half year profit, shares in Specialty Fashion tumbled after it said it was unclear if investment company Al Alfia, which is controlled by the Qatari royal family, can now fund its planned acquisition.
That is due to the death in October of the sole shareholder's father, Sheikh Khalifa bin Hamad al-Thani, who was Qatari ruler from 1972 to 1995.
"Due to the unforeseen circumstances relating to the death of the father of the sole shareholder of Al Alfia, the funding has been temporarily restricted in probate," Specialty Fashion said in a statement.
"Al Alfia has advised they are addressing the probate issue, however it has not been able to confirm when this will be resolved."
Shares in Specialty Fashion were down 8.6 per cent, or 5.5 cents, at 58.5 cents at 1430 AEDT.
The company also owns the Katies, City Chic, Autograph and Crossroads retail brands, and posted a lift in net profit to $12 million in the six months to December 31.
An underlying profit at Rivers, which has been a weight on Specialty Fashion since it was acquired in 2013, contributed to the overall profit growth.
But the group's overall revenue dropped one per cent to $430 million in the half year, as same store sales dropped two per cent.
Chief executive Gary Perlstein said it was a hard fought result achieved during a difficult and volatile Christmas trading season, largely due to improved margins.
"We improved our gross margin from 56 to 58 per cent and we were able to do that by reducing the level of markdowns in the business," he said.
Aggressive discounting that has now become the norm in clothing retail, due to competition from overseas players, plus a shift to online and weaker consumer spending, appears likely to continue, Mr Perlstein said.
The company will continue to focus on the transformation of Rivers and growing its other brands, including expansion of City Chic in Australia, while waiting for clarification of the takeover, he said.
RIVERS FINALLY DELIVERS FOR SPECIALTY FASHION
* Half year profit up 36.8pct to $12.1m
* Revenue down 1pct to $430m
* No interim dividend, unchanged
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