Moss Bros shrugs off tough times as it books retail and e-tail sales rises
Moss Bros had good reason to feel pleased with itself on Friday as the company reported higher sales in the 15 weeks to May 13. Against a backdrop of a tough clothing market, and one that’s especially challenging for the men’s formalwear sector as British men become increasingly casual in their everyday dressing, the suits specialist reported “strong retail sales”. And it also booked a double-digit rise in e-tail sales, although its suit hire business acted as a drag on the total.
So what was that total? Sales for the business rose 3.7%, or 2.3% on a comparable basis. But with the hire category striped out, those comp sales (including e-commerce) rose 5.5% as the new season offer performed well.
As mentioned, E-commerce sales continued to outperform, up 14.7% on last year, with continuing growth in mobile traffic and e-commerce now making up 11.6% of total sales compared to 10.7% a year ago.
But the firm said that comparable hire sales on a 'cash taken' basis were down 14.2%, due to the reduced value of the deposit taken from each customer when a hire order is first placed. Hire order numbers booked for collection in 2017 were 3.8% down and the total value of these orders was 1.6% lower.
Also in the bad news column, retail gross margins were 50 basis points below the previous year after the firm re-introduced a midseason sale during April. This reflected the “much tougher” trading environment than 2016 when it had decided not the run the sale.
While saying how pleased he was about the performance, CEO Brian Brick struck a cautious note. He highlighted the continuing difficult conditions on the UK high and the “highly competitive marketplace which has seen significantly more markdown activity than the same period last year.” And he said the company remains “acutely aware of the economic headwinds which we will face for the remainder of the financial year, as input cost increases come into effect.” He also said the board is “mindful that zero real wage growth will impact on consumer confidence” and promised that the firm would “remain agile in our response to these market conditions.”
But the company has plenty to look forward to, suggesting that the period ahead should yield more strong sales. The peak period of its trading year is coming up as it enters the wedding season, Ascot and the school prom season.
And its store revamp/opening programme is progressing well. A further three stores have been refitted and two new stores have opened so far this year, bringing the total number of stores trading in the new format to 101 out of a total portfolio of 129 stores. Its new format stores continue to trade ahead of those 28 non-refitted stores “and are on track to achieve their anticipated payback targets.”
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