Moss posts loss after 'volatile' first half
Moss Bros Group has posted a first half loss and decline in sales after trade was affected by a shortage of stock, this year’s heatwave and England’s performance in the World Cup.
The men’s formalwear retailer has also said that it now expects to deliver full year operating profit materially lower than the current market expectation of £2.3 million.
Total group revenue in the six months to 28 July was down 3.3% year-on-year to £64.5 million while like-for-like retail sales fell by 6.9%. Like-for-like hire sales, which represented 12.3% of total sales in the half year, were 7.8% down.
The company reported a pre-tax loss of £1.7 million after adjusting items of just under £2 million.
Meanwhile EBITDA was £3.7 million compared to £7 million in the same period in the previous year.
Moss said trading in its first quarter was impacted by a shortage of stock resulting from previous temporary supply chain issues although the stock position was largely corrected by May. However, this year’s hot summer combined with England's success at the World Cup, meant that customer footfall dropped on average by 7% year-on-year in the second quarter.
Brian Brick, Moss Group chief executive, said: "The first half trading performance was one of the most volatile for many years. We initially saw sales performance recover well following our previously highlighted early season stock shortages, and sales were generally ahead of expectation.
“This came to an abrupt end when high street footfall dropped dramatically, impacted by the protracted and unplanned period of extremely hot weather and the widespread distraction of England's success in the World Cup.
“Although all retailers were impacted in some way, menswear was specifically impacted negatively by the combination and longevity of these two external factors. The position was exacerbated by the distressed discounting of some competitors, although we have taken the decision to stand firm on pricing where we feel Moss Bros' product has a strong USP.”
During the half year Moss opened two new stores and completed three refits. This meant that 130 stores were trading at the period end.
Looking at current trading, Moss said retail like-for-like sales, including VAT, declined by 3.7% in the seven weeks to 15 September to mark an improving trend. It also reported that early responses to its new autumn/winter ranges has been positive.
Brick said he expects the current highly competitive retail landscape to continue and that trade will be impacted by an unpredictable economic back-drop and increasing cost headwinds.
He added: “We have reviewed our expectations for the second half of the year despite having a number of key trading weeks still ahead of us and whilst short-term cost cutting would make us more certain of mitigating the footfall related gross profit shortfall and therefore hitting the market's expectations, we feel it would be detrimental to the long-term health of the business. As such, we have taken the decision to continue to invest and to deliver profit lower than expectations.“
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