Sep 24, 2019
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Moss Bros takes a step forward as like-for-like sales rise

Sep 24, 2019

Moss Bros opened its half-year results statement on Tuesday with a piece of good news, saying that its physical shops returned to like-for-like growth in the 26 weeks ended July 27.

Moss Bros

That growth may only have been 0.6%, but it was a big achievement for a company that has faced major challenges in recent periods, some of them beyond its control, but others of its own making.

Overall, the men's tailoring specialist said total group revenue excluding VAT rose 1.4% year-on-year to £65.4 million. Like-for-like retail sales including e-commerce were up 2.9%, and as mentioned, the stores alone managed that very small increase. Of course, before we get too carried away with that fact, we have to remember that a succession of like-for-like falls in the physical shops, made the comparison easier than it would normally have been.

There was good news though as far as online sales were concerned with an increase of 20% across all platforms. This means that online sales now account for 15% of the company’s total compared to 12.7% this time last year.

But as usual, the channel for which Moss Bros used to be best known — hiring suits out for special occasions — declined again with a 14% drop. It now accounts for only 10.7% of total sales compared to 12.3% a year ago.

The company also said that the retail gross margin at 55.8% was 0.7% lower for the half year versus H1 2018, impacted by the channel mix.

So what did this all mean in terms of profits? Well, EBITDA fell. For the first half it was £11.4 million after IFRS 16 impact and £3.1 million before IFRS 16 impact, down from £3.7 million a year ago. Pre-tax adjusted profit before IFRS 16 was just about zero, which meant it was £0.2 million lower year-on-year. And the statutory pre-tax loss widened to £2.7 million from £1.7 million after various one-off items were inlcuded.

So it looks like the half was all about a slow recovery and consolidation rather than any kind of spectacular growth. But the company said that its ongoing investment in product, new customer acquisition and in-store experience “has delivered positive results across our retail offering in a market which continues to be extremely challenging”.

It said the positive retail like-for-like performance from its physical store estate is “encouraging and has been delivered in spite of continued declining footfall”. And it looks like the company is one of many speaking to its landlords at the moment about rent levels as it added that “the group remains active with landlords to ensure we align store occupancy costs with the lower footfall”.

On the plus side, it said the e-commerce performance and product distribution via third-party marketplaces continues to grow, and its Tailor Me custom tailoring service also continued to grow strongly, with order numbers taken during the first half up 48% year-on-year.

And current trading? The company said it's seeing results for the first eight weeks “consistent with our full-price focus and with less old season stock to clear,” which suggests that trading is going to plan, even if it’s short on detail.

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