LONDON (Alliance News) - Men's formalwear retailer Moss Bros Group PLC Monday said revenue gains in the first half have left it confident in its outlook for the remainder of the year, prompting it to raise its dividend, but said its profit in the half year was hit by higher costs as it continues to invest in the business.
The retailer posted a pretax profit of GBP2.0 million for the 26 weeks to July 26, slightly lower than the GBP2.2 million it reported in the first half of last year, which it said was due to a higher number of store closures for refits. It said its profit was also hit by higher marketing costs and administrative expenses.
"As planned, costs rose in the first half in marketing, e-commerce and IT to support business growth. The implementation of new systems and processes will support our multi channel customer offer," the company said in a statement.
Revenue on the other hand rose 4.6% to GBP55.8 million, up from GBP53.3 million a year earlier, with like-for-like sales up 6.4%.
Moss Bros said like-for-like retail sales were up 8.5% in the period, buoyed by strong online sales. Hire sales, which make up around 15% of total sales, were down 2.7% on a like-for-like basis, an improvement from the 3.8% fall it reported for the first 16 weeks of the first half.
"The business performed strongly in the first half with the increase in retail gross profit offsetting the shortfall in hire. Ecommerce continued to achieve significant growth and our refitted stores continued to deliver payback targets," the company said.
Moss Bros said its continues to trade well and in line with its internal expectations, saying that trading in the seven weeks to September 13 has been encouraging, with like-for-like sales up 6%. It said its suit hire business is well prepared for the peak eveningwear season.
The retailer has been busy investing in its UK store estate, as well as other areas of the business, including the launch of a new hire website last year, developing a number of international websites for its retail business, and expanding its product offerings.
The company said the business is well placed to make further progress during the second half, and signalling its confidence, increased its interim dividend to 1.7 pence per share, in line with its progressive dividend policy, and up on the 0.3 pence per share it declared last year.
"The decline in Hire moderated in the second quarter, and we expect to see further improvement in the second half of the year as we move out of the wedding season into eveningwear. We continue to develop our hire proposition, both in terms of product offer and service. The group's financial performance continues positively and in line with the board's expectations for the outturn for the year," said Chief Executive Officer Brian Brick in a statement.
Moss Bros shares were trading 3.9% higher Monday morning at 94.25 pence.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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