Moss Bros revenues drop, but says it's on right track as it chases full-price sales
Moss Bros has faced tough times in recent periods and its trading update on Thursday (for the 28 weeks to January 11) showed it’s not out of the woods yet as its sales continued to fall.
But the menswear specialist pointed to some key areas in which it’s progressing and remains upbeat on its future prospects.
But first, those trading numbers. It said total sales in the half were down 3%, and they fell 3.2% on a like-for-like basis. Total retail sales, including e-commerce and wholesale, accounted for more than 92% of group revenue during the period and were 1.6% lower than last year, or 1.8% down like-for-like.
Even its e-tail sales dropped. Online sales from its own website and other online marketplaces edged down 0.4% on last year. Online comprised 17% of group revenue during the period, up from 16.6% last year.
Also bad news for its traditional business was the fact that suit hire sales, which accounted for just under 8% of group revenue, were 17.7% lower on a like-for-like basis. Yet it said that it continued “to make progress in respect of newer hire services which may be offered to address the challenges facing our hire business and [we] expect to be able to update on this in the first half of FY20/21”.
But on the plus side, Tailor Me order numbers were more buoyant and grew by 55% across the period versus last year.
As it said back when it released its last set of results, the company “has identified a clear and comprehensive strategy which seeks to transform the way in which it operates in its marketplace, elevating the brand in the eyes of its customers and investing in key strategic levers in order to drive long-term performance”.
And it maintained that it “has made good progress overall” on this, “underpinned by a strong balance sheet and flexible store portfolio”.
Importantly, during the latest half year, a key focus was on full-price sales and reducing old season stock to clear. It said this “has been successful and has resulted in improved retail gross margin rates throughout the period”. Trading gross margins grew by around 300 basis points against last year, as a result of a reduction in the level of clearance activity throughout the half.
And while like-for-like sales were down, they were as expected “against a backdrop of ongoing weak consumer confidence”.
The company now expects to report a full-year adjusted loss before tax (pre-IFRS16) of approximately £1m.
CEO Brian Brick said of all this: “We are gaining traction across a number of strategic levers which are aligned with our longer-term strategic goals. We have seen more intensive discounting from our competitors and a materially lower level of footfall across the high streets and shopping centres of the UK. Despite this, we have resisted discounting pressures, facilitated by our careful buying plans which have meant that we are holding lower levels of terminal stock to clear. This has been particularly evident in our high street stores”.
But he thinks the year ahead “will continue to be challenging until we see an improvement in consumer confidence and a stabilisation in footfall across UK shopping destinations combined with a re-alignment of occupancy costs to properly balance the costs and rewards of doing business in physical retail stores”.
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