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Moss Bros revenue rises despite “self-inflicted” stock problems

Moss Bros suffered from “a tough end to the year” in 2017 but saw revenues rise, despite seeing “self-inflicted stock problems and a fragile consumer environment”.

Its preliminary results show profit before tax dropped by 6.1% to £36.7m in the period between 29 January 2017 and 27 January 2018, compared with the previous year’s equivalent timeframe.

EBITDA fell 2.2% to £13.3m, which the group said was affected by the impact of “significant cost headwinds”.

The news comes after Moss Bros issued its second profit warning last week after “material short-term issues” with stock availability, which it aims to resolve later this Spring.

However, total group revenue excluding VAT grew by 3% to £131.8m during the year. Group like-for-like sales including VAT inched up by 1.6% to £137.3m.

Commenting on the results and outlook, CEO Brian Brick admitted: “The group had a disappointing end to the year which was a combination of self-inflicted stock problems and a fragile consumer environment.

“In spite of this, we made progress throughout the year, building brand equity, alongside significant improvements in our multichannel proposition, leaving us well placed to capitalise on the tailoring expertise which we possess in-store and online.”

He added: “It is frustrating that after a strong first half performance, which continued into the third quarter of the year, the final quarter’s performance was below the level we had forecast.

“We suffered from a significant stock shortage, due to the poor implementation of the project to consolidate suppliers. We left ourselves with too little ‘running line’ stock to close out the year having bought cautiously for the second half of 2017. This has continued to hamper our performance into the start of the year.

“Going forward, we are planning for an extremely challenging retail environment, not least because of the uncertain consumer environment and significant cost headwinds.

“However, there is no question that we have hampered our own position through the stock shortages and as this gets back on track, our strong consumer proposition is restoring momentum. We will ensure that we continue to invest in this proposition to protect our position.”

He also said that the early response to its 2018 summer 18 retail range has been “positive” despite challenges presented by its stock shortage.

As a result of its stock problems, retail like-for-like sales including ecommerce and VAT are down by 6.7% in the first eight weeks of its new financial year.

Ecommerce sales are up 4% for the same eight-week period. However, hire like-for-like has declined by 4.9%.

In the coming year, Moss Bros plans to accelerate changes to its hire service, which will account for a “much lower” percentage of sales going forward.

It will also increase investment in its ecommerce offering, and invest more in its “brands, colleague and service proposition”.

Its cash position stood at £17.5m, compared with £19.5m on 28 January 2017.

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