Specialty Fashion Group (SFG) has returned to profit but has given a cautious outlook because consumer confidence remains weak.

The company, whose brands include Millers, Katies, Crossroads, Autograph, and City Chic, on Monday said its 2012/13 financial year profit was $12.97 million, compared to a loss of $2.8 million the previous year.

The fashion retailer said its margins were higher thanks to lower product and freight costs, lower cotton prices and favourable currency exchange rates.

It also made savings from lower rents, the exit from leases on underperforming stores and staff rostering changes.

“The group remains very cautious as to the extent of organic growth that may be achieved at the current time given the ongoing lack of consumer confidence in Australia,” Specialty Fashion said in a statement.

“Management continues to explore all options to grow the Specialty Fashion Group through physical and digital channels.”

The group has 886 stores in Australia and New Zealand.

It opened 40 new stores during the 2013 financial year, and closed 47 underperforming shops, 18 of which related to the La Senza brand.

The group dumped its licence for La Senza in Australia after product developed for the North American market failed to translate to Australia.

Annual revenue fell 0.5 per cent, to $569.5 million, reflecting the company now had seven fewer stores.

But the group’s online sales grew 50 per cent to $21.9 million, or 3.8 per cent of total revenue for the year.

Shares in Specialty Fashion were 0.5 cents lower at 87.5 cents at 1311 AEST.

The company declared a fully-franked final dividend of two cents.