LONDON (Alliance News) - Moss Bros Group PLC Wednesday reported higher pretax profit for its last financial year, as sales of formal wear from its refitted and re-launched stores as well as online more than offset a decline for its struggling hire business, although it said that business is showing signs of recovery.
The retailer said pretax profit for the year ended January 31 grew 9% to GBP4.8 million from GBP4.4 million the year before, as revenue rose 5.1% to GBP114.7 million, from GBP109.1 million and it kept tight control over rising costs. However, gross margin declined 70 basis points to 58.3% as the higher-margin hire business made up a lower proportion of sales.
Like-for-like sales were up 5.5%, compared with 4.2% growth in the year before, as 7.1% growth in retail sales offset a 3.6% decline in hire sales.
Its earnings before interest, tax, depreciation and amortisation increased 5.4% to GBP9.7 million from GBP9.2 million.
The company said it refitted 14 stores as part of its ongoing refit plan and plans to refit a further 27 stores this year. It also relaunched its supporting sub-brands as Moss London, Moss 1851, Moss Esq. in the autumn, which it said boosted like-for-like sales.
Moss Bros reported a cash balance of GBP19.6 million, compared with GBP28.3 million a year earlier, following the ongoing investment in the store refit programme.
"The store refit programme is now entering its fourth year and 58 stores are now trading with the new look store format. Recognising that refitted stores are consistently achieving the three year payback criteria and in light of cash reserves available for investment, the board has decided to accelerate significantly the refit programme with 27 stores planned for refit in 2015/16," it said.
"This will have an impact on cash reserves in the short term due to the timing of capital expenditure but given the short payback period and the related reduced capital expenditure in 2016/17 this will be recouped quickly," Moss Bros added.
The company also reported online sales growth of 59% and said online sales now make up 7.8% of group revenue.
Moss Bros blamed the decline in hire sales on weak demand for wedding and evening wear, but said it has seen an upturn in bookings so far for the 2015 wedding season.
"We have invested in new hire stock, introducing our lounge suit offer with two new styles, introducing new styling within our morning suit offer, and adding to our branded ranges which have proved popular," it said.
Overall like-for-like sales for the first seven weeks of its current financial year are up 7.5%, helped by the improvement in hire and a strong early response to its new season clothing ranges, it said.
"The early response to the 2015 Spring/Summer retail range is positive, and retail like-for-like sales are continuing to improve year-on-year. Hire is showing signs of recovery and we are well placed to maximise revenues in 2015 following a difficult two years for wedding related hire," Chief Executive Brian Brick said in a statement.
"The business is on track to achieve market expectations in 2015/16," he added.
The company will pay a total dividend for its last year of 5.25 pence, compared with 5.00p the year before.
Moss Bros shares were up 2.1% Wednesday afternoon at 107.75p, marking a seven-month high for the stock.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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