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Mosaic reports sales uplift but predicts tough times ahead

Sales at Mosaic Fashions, which includes high street brands Karen Millen, Oasis and Warehouse, rose 5% to £419 million for the 6 months to July 26, (excluding Whistles, which it sold earlier this year).

EBITDA jumped 6% to £33.4 million, representing 8% of total group sales, and international sales were up 14% to £79 million. Online sales soared 85% to £13.6 million. Margins rose 0.7% to 62.2%.

The group said the young fashion market remains more buoyant than other sectors and Warehouse has performed well throughout the season with a strong product offer.

Oasis, after a difficult year last year, has shown a significant turnaround with the new team delivering substantial improvements to the range, encapsulated by the successful launch of several sub-brands, such as Floral Frocks. Karen Millen has had a very strong first half driven by international growth, with international sales now over 48% of the brand's turnover.

The group said it had instigated a number of cost-saving programmes across the brands and shared services, which has limited the impact of increases in non controllable expenses and head office costs.

Mosaic Fashions chief executive Derek Lovelock said: "Despite an increasingly difficult retail climate in the UK, I am delighted with the improvement in group performance. The start of the second half has shown no relief in terms of adverse market conditions and the impact of the recent news from the financial markets on consumer confidence cannot be underestimated.

"We remain very cautious of the overall UK market for the remainder of FY 2009 and the whole of FY 2010, and this, together with the impact of adverse exchange rate movements on margins, means we anticipate a very tough time ahead for UK fashion retail."

Long term borrowings also reduced by £40.4 million to £334.0 million in the first half.

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