Moss Bros growth slows but still impresses in tougher-than-ever market

Menswear specialist Moss Bros had a good 12 months in the period to January 28, even though it faced “one of the most highly competitive [years] we have seen for some considerable time.”


Moss Bros growth is continuing on an upward curve


It is no surprise then that while sales and profits rose, their growth lagged the prior year. Yet on key metrics, the company is undeniably powering ahead and growth is continuing into the new financial year with the late Easter expected to boost sales in the weeks ahead.

In numbers, all that means total group revenue, excluding VAT, was up 5.7% to £127.9 million in the 2016/17 year. Meanwhile comparable sales including VAT rose to £131.5m, a 5.3% increase compared to 8.2% a year ago, and comparable retail sales rose 6%, slightly slower than the prior year’s 7.6% rise. Hire sales, which account for 13.7% of the total, saw growth slowing even more as they rose only 1.5%, compared to 11.7% 12 months earlier.

But the company did not seem to mind about the slowing growth and who can blame it? A profits surge and impressive rises in key areas for the future (like m-commerce) were more than enough to justify its description of the year as one of “continued strong progress”.

E-commerce sales including VAT rose 15.7% and now make up 11% of all sales. That may not have been as good as the 36.3% growth of a year ago but that kind of surge has to slow down at some point and double-digit expansion for the year is still impressive. Importantly, mobile and tablet sales growth was “strong” and m-commerce now accounts for 43% of total e-tail sales.

More good news came as pre-tax profit rose 20.3% to £7.1m and EBITDA rose 8.8% to £13.6m, driven by improved sales, more targeted discounting and tight control of costs.

And the gross margin also improved in total for the year by 1.5% to 61.3%, due to lower levels of discounting.

The company said it saw benefits from its ongoing investment in brand identity and revamping its stores, as well as from the money it has spent on 'back-end' infrastructure for its e-tail ops.

And it said that its 'Tailor Me' custom tailoring service is “gaining traction with customers, nationwide.”

FUTURE PROSPECTS

On current trading, Moss Bros said comparable retail sales, including VAT, in the first seven weeks of the new financial year rose 4.3% with that seven-week period avoiding a non-comparable Easter public holiday that fell in week eight last year).

Early responses to the spring/summer 2017 range across Retail and to the new Hire ranges have been good, it said.

It added that this year’s Easter, which marks the start of the wedding season, falls three weeks later than in 2016, temporarily delaying some hire order collections (and therefore revenues) by three weeks. That has meant hire orders booked for collection in 2017/18 are currently down 1% on the previous year.

But the late Easter could be a boon too. A US report this week from the National Retail Federation showed that consumers are planning to spend more on fashion goods this year than last and if this behaviour is repeated in the UK, Moss Bros could benefit. It looks like this Easter will see much better weather than in 2016, another positive factor for spring fashion sales.


Moss Bros is targeting a wider age range


Not that the company is being complacent. Chairman Debbie Hewitt said last year’s retail environment “became one of the most highly competitive we have seen for some considerable time, with heavy and intense discounting.” But she pointed out that the firm “traded our way through what was an unforgiving market, which saw a number of new branded entrants to the menswear market and the exit or reduction in market share for a couple of long established brands, reinforcing the need for us to keep close to consumer trends and to modernise our offer accordingly.”

She said the core Moss Bros master brand is now well established and the company saw “reasonable growth” in each of its supporting sub-brands (Moss London, Moss 1851, and Moss Esq), with Moss London expanding its reach to a younger customer, capitalising on the growth in trend of occasions like school proms.

Actions to develop its product offer included the growth of 'Tailor Me', “which is achieving significant traction as a more accessible form of bespoking, enabling a significant proportion of our suit range to be personalised.”

Copyright © 2017 FashionNetwork.com All rights reserved.

Fashion - Ready-to-wearLuxury - Ready-to-wearRetailBusiness