Rent disputes cut both ways for Naomi Milgrom’s retail empire as Covid lockdowns take toll on Sportsgirl and Sussan brands

The woman behind Sportsgirl and Sussan brands took a hard line stance against paying rent amid Covid shutdowns, and financial reports show the fight might have paid off.

Rent relief helped boost profits for Naomi Milgrom’s retail empire, accounts reveal.​

The vexed issue of whether to pay rent or not during Covid lockdown has both hit and helped the bottom line of Naomi Milgrom’s Sussan retail chain.

Fashion retailer Sussan Group, which includes the Sportsgirl, Suzanne Grae and Sussan brands, has been embroiled in a legal dispute regarding Sportsgirl’s flagship store in Melbourne.

Sportsgirl had been sued for $2.4m in unpaid rent at its store in Melbourne’s Bourke Street, but Milgrom had argued the store was unable to be accessed by customers due to lockdowns imposed by the Victorian government.

Milgrom in July won a court bid to have its claim for rent reduction at the Sportsgirl store heard via commercial arbitration, but landlord Great Union won a subsequent appeal and the matter will now be ruled upon in the Supreme Court.

Milgrom took a hard line against landlords last year, refusing to pay rent amid a series of pandemic-related lockdowns and work-from-home orders by state governments.

Financial documents for Milgrom’s ARJ Group Holdings, the owner of the wider Sussan business, show just how successful that hard line stance has been across the chains and also the hit the retailer has taken because of Covid.

ARJ recorded a net profit of $34.8m for the 12 months to June 30, a financial report for the year recently lodged with the corporate regulator reveals.

The accounts also reveal Milgrom’s business empire was eligible for about $34m in federal government JobKeeper subsidies and that 68 stores across the group were permanently closed in 2021.

It also showed almost half of the profit result was also due to rental relief granted by Sussan’s landlords around the country.

“The 2021 result includes $15.7m of negotiated landlord rent abatements from the impact of Covid-19 in 2020 and 2021 years (and) the reversal of $8.8m in impairments from the prior year,” the report says.

“This was partially offset by an increase in inventory impairment provisions of $3.3m due to the extended forced lockdowns in Victoria and NSW.”

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Naomi Milgrom

• Age: 68

• Lives: Melbourne

• Estimated wealth: $504m

• Industry: Retail

• Secrets of success: Building successful fashion brands such as Sportsgirl and Sussan

Source: The List – Australia’s Richest 250

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While there is no mention of ongoing court cases related to rental payments, a note in the report says: “Further negotiations with landlords remain ongoing at the date of this report and the financial impact cannot be reliably measured.”

The accounts show that ARJ’s revenue was $344m for 2021, slightly down from $352m in 2020 and well shy of the $453m income that the business received in 2019, the last full year before Covid.

ARJ’s 2020 accounts, lodged at the same time as the 2021 results, reveal that the business made a $39.9m loss in the 2020 financial year, which included $29.5m of impairments and $3.8m of provisions in the result.

Milgrom was paid a $32m dividend for the 2019 financial year, when her business made a $15m net profit and earnings before interest and tax, depreciation and amortisation of $32m.

Milgrom is the third generation of one of the wealthiest retail dynasties in Australia and has been at the helm for 30 years of a business that traces its history back to a lingerie store opened by her grandmother in Melbourne in the 1930s.

The eldest daughter of Eva and Marc Besen, a billionaire in his own right on The List – Australia’s Richest 250, Milgrom bought Sportsgirl in 1999, then a struggling national chain of about 100 fashion stores, and transformed it into a thriving business.

In 2003, she acquired the interests of the rest of the Besen family in the Sussan Retail Group and became the sole owner of what was then 500 Sussan, Suzanne Grae and Sportsgirl stores.

She had joined Sussan as a marketing and strategic manager in 1988 after her father had bought control of the group from the Gandel family. Two years later she was chief executive and built one of Australia’s most successful female fashion brands.

In more recent years though, there have been reports that Milgrom has been keen to sell her retail interests. Investment bank Citigroup was at one stage reported to be advising Milgrom on a review of her business ahead of a potential sale, but no moves were subsequently made.

Milgrom is also a prominent philanthropist, with her Naomi Milgrom Foundation having funded the temporary MPavilion in Melbourne since 2014.

Originally published as Rent disputes cut both ways for Naomi Milgrom’s retail empire as Covid lockdowns take toll on Sportsgirl and Sussan brands