Moss Bros will rise to the challenges facing UK retailers in 2017 but the looming Brexit negotiations are a cause for concern because they are “out of our control”, chief executive Brian Brick said today.
“With business rates, the apprenticeship levy, national minimum wage and currency fluctuations, the environment is challenging – but I can’t remember a time when retail was easy,” he said.
While confident about the company’s growth opportunities, Brick acknowledged that the retail landscape for this year and beyond will be tough because of the uncertain political environment and its impact on consumer confidence, as well as rising operational costs and a weaker pound.
“We are fully hedged through spring and autumn, so there is no currency risk at the moment,” he said. “We work closely with suppliers and you will see some small price changes but our leading prices remain competitive, which is what I think most retailers are doing.
“The impact of tomorrow’s article 50 is probably the biggest worry because it is out of our control.”
Moss Bros also reported an improvement in its gross margin, up 1.5% to 61.3%, as it fought off “heavy and intense discounting”.
Chairman Debbie Hewitt said the “unforgiving market” had prompted new brand entrants and the exit or reduction in market share for a couple of long-established brands.
Brick added that Moss Bros had countered increased competition by investing in its stores and customer experience, as well as introducing more younger and contemporary lines. He pointed to growth in the menswear market in the UK, underlined by the likes of New Look Men, which has been rolling out its standalone menswear stores.
“There is more interest and more activity in menswear as a sector, not necessarily in our segment, but we remain focused on our multi-branded and segmented pricing architecture,” he said.
He said the firm’s Tailor Me custom tailoring service, which was launched in November 2015, is now available in all stores and is seeing “some real traction”. The service allows customers to get a custom-made suit in the fit of their choice within 30 days, and offers a choice of 90 fabrics, three fits and various styling options such as linings, lapels, monogramming and buttons for an extra £100.
Moss Bros trades from 127 stores, having opened seven and closed four during the year. It plans to open a further four in the next year in Dundrome, Lincoln, Rushden Lakes and Bexleyheath. Between 10 and 15 stores will open in the next three years.
It will also upsize in some locations and close any underperforming stores.
“Stores remain an important part of our strategy but in light of the costs involved we need to ensure the terms are correct,” said Brick.
“The underpinning of hire and the demand for ecommerce click-and-collect and click-and-return points, together with advantageous lease deals, means there is an opportunity to expand our store footprint on a selective and cost-effective basis, with good returns.”
Ecommerce now comprises 11% of total sales, up 15.7% year on year, as Moss Bros invested into a single view of its customer and data. The target is to increase this to 20%-25% of the business, but Brick said this would be in line with overall growth, “not to cannibalise the existing business”.