By Aimee Chanthadavong

Specialty Fashion Group, which owns brands including Miller, Katies and Crossroads, has bought iconic Australian apparel brand Rivers Australia for $5 million.

The acquisition of 160 Rivers stores is part of Specialty Fashion Group’s long-term growth strategy to expand its footprint in the mature, value segment of the specialty fashion market and marks the group’s entrance into value footwear and men’s and children’s clothing.

This comes after the company’s research revealed almost 50 per cent of men’s clothing purchases are made by women and Rivers is the favourite footwear brand of Millers’ customers.

“For Specialty Fashion Group, the transaction makes business sense as it is a highly complementary acquisition,” said CEO Gary Perlstein of Specialty Fashion Group, which will be investing $ 4 million in resources on an annualised basis for the new business.

“The iconic Rivers brand resonates strongly with the Group’s existing customer base. There is an operational improvement opportunity in the short-term, and we expect to grow the brand, with material benefits from the acquisition to flow through from FY2015.”

According to Specialty Fashion Group, Rivers has the potential to grow its portfolio to 220 stores by leveraging off the group’s database of seven million customers.

Additionally, online sales for Rivers has the potential to grow significantly through adopting the Group’s omni-channel strategy and leveraging the investments that Specialty Fashion Group has made into its digital resources.

Rivers’ FY2014 revenue is estimated to be approximately $180 million, delivered through its portfolio of 160 stores and online store. The brands’ FY13 EBITDA was 5 per cent of revenue.

“A strong balance sheet and well-managed cash position has afforded the Group this opportunity which is earnings accretive,” Perlstein said.

“In the immediate term we intend to improve the stock turns of the business, driving sales and reducing the working capital requirements of the brand. Medium to long term we can take advantage of the leverage of the Group to Rivers’ benefit, and invest in store growth. Further guidance will be provided in the Group’s half year results in February 2014.”

All Rivers employees will be offered employment with Specialty Fashion Group.