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Mosaic cautious despite sales rise

Mosaic Fashions, the womenswear and footwear group which includes retailers Karen Millen, Oasis and Warehouse, posted an increase in sales and profits in its first half of the financial year, but warned retailers to take a prudent view of sales expectations in tough times.

Group sales rose 5% to £419 million for the six months to July 26 (excluding the Whistles chain, which it sold this year). EBITDA leaped 6% to £33.4m, representing 8% of
total group sales, while international sales rose 14% to £79m. Online sales soared 85% to £13.6m and margins also rose 0.7% to 62.2%.
Mosaic chief executive Derek Lovelock said: “In a difficult market it’s a good set of results.”

However, after a strong August and September, Lovelock said sales had fallen back over the past two weeks. He added that the young fashion market was buoyant and that Warehouse had performed well throughout the season.

Womenswear chain Oasis, after a difficult period last year, has performed a turnaround after bringing in a new design team to improve its range. Karen Millen has had a strong first half driven by international growth, with international sales accounting for more than 48% of the retailer’s turnover.Deputy chief executive Mike Shearwood said Principles was also doing well and profits at Coast improved in the first half last year, but Lovelock said the UK occasionwear market was challenging.

He said footwear chain Shoe Studio experienced a difficult first half, but that managing director Gordon Baird was reviewing the business.Lovelock added: “We remain cautious of the UK market for the rest of the 2009 financial year and for 2010. This, together with the impact of adverse exchange rate movements on margins, means that we anticipate a tough time ahead for UK retail.”

In response to speculation that the business would be impacted by troubles in the Icelandic banking market, Lovelock said: “We have had assurance that funding for all UK investments is in good shape.”

Icelandic investment group Baugur owns 49% of Mosaic and Icelandic bank Kaupthing owns 20%.

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