Moss Bros struggles in pandemic, but e-sales rise
The latest results from now-privately-held Moss Bros saw it reporting a pre-tax loss for the year to last January, the menswear specialist losing £7.4 million compared to a profit of £4.2 million in the previous year.
And its sales fell 0.5% in the pre-Covid period, dropping to £128.3 million. Its like-for-like sales fell a wider 1.2%, even though the company managed to boost its online sales by 6.5%. Those online sales also accounted for almost 17% of total revenue in the period, that percentage having increased by 2.4%.
The suit hire part of the business, which has been shrinking in recent years, continued to do so with like-for-like sales in this area down over 16%. It may be a much smaller part of the business these days, but its margins are higher than its retail ops and so this dented the results further.
The EBITDA loss was £5.5 million and the after-tax loss was £8.1 million, wider than the £3.8 million loss of the previous year.
The company used to be listed on the London Stock Exchange but was delisted in June after a drawn-out takeover process that saw it new soon-to-be-new-owner unsuccessfully trying to get out of the deal once the pandemic’s severity became clear.
On the plus side, it did say that there has been no discernible impact or business interruption arising from the uncertainty of Brexit. But it seems that the impact of the pandemic was more than enough to undermine the business and it entered into a company voluntary arrangement late last year in order to improve its balance sheet and negotiate new deals for its store estate. It has renegotiated some leases and said it expects to exit the remaining leases where it considers it to be not viable for it to continue to trade.
It’s clear that the firm has faced the full onslaught of the Covid crisis as formal social events were cancelled and office workers based at home had little need to buy suits. Moss Bros said that its balance sheet has been “substantively affected by the ongoing pandemic”.
Prior to the onset of the crisis, it had been expecting sales growth last year. But with most of its stores shut, that wasn't to be. And even though its shops reopened from mid June it still only achieved around 50% of pre-Covid sales by August. And sales in the five weeks before the second national lockdown in November were only between 31% and 36% of the prior year levels, which it said was an unsustainable drop.
With a third national lockdown still on, the company said it considers the business is unlikely to return to pre-Covid levels in the short term.
And while the opportunities for customers to buy and wear formal clothing are few and far between at the moment, the company added that its online performance has continued to grow since the pandemic started, with significant increases in the average transaction value "as we continue to provide outfits and looks rather than just suits”.
But retail stores remain vital to its overall proposition so its ability to grow remains stunted until those shops can reopen.
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