Moss Bros shares plummet 20% as menswear firm warns on profits after heatwave melts sales
- Moss Bros said full-year profits will be materially lower than expectations
- It swung to a loss in the first half of the year and sales fell 6.9%
- The retailer blamed the warm weather and the world cup for the poor figures
Shares in men’s apparel firm Moss Bros plunged today after it warned investors that full-year profits would be ‘materially lower’ than expectations.
The stock fell by around 20 per cent to 36p in early trading as an unscheduled statement laid bare the state of the its woes.
Moss Bros said it swung to a £1.7million pre-tax loss in the first half of the year, a steep drop from the £3.9million in profits it posted last year. It also suffered a 3.3 per cent drop in group sales to £64.5million, while retail like-for-likes fell 6.9 per cent.
Moss Bros issued profit warnings earlier this year when it was stung by stock shortages
The firm, which was strung by stock shortages in its first quarter, pinned the poor performance on extreme weather conditions and the ‘distraction’ of the World Cup football tournament.
It said its bottom line was knocked £1.2million by a ‘small number of underperforming stores’, and a further £800,000 by ‘reorganisation and employee-related costs’.
Boss Brian Brick described the first half of the year – in which the firm has issued three profit warnings – as ‘one of the most volatile for many years’.
He said: ‘We initially saw sales performance recover well following our previously highlighted early season stock shortages, and sales were generally ahead of expectation.
‘This came to an abrupt end when high street footfall dropped dramatically, impacted by the protracted and unplanned period of extremely hot weather and the widespread distraction of England’s success in the World Cup.
‘Although all retailers were impacted in some way, menswear was specifically impacted negatively by the combination and longevity of these two external factors.’
Chief executive Brian Brick (above) said it was the most volatile period for many years
Brick said the firm’s issues were exacerbated by its competitors engaging in high levels of discounting, while Moss Bros held firm on pricing.
The warning from Moss Bros adds to a chorus of concern around the health of the High Street and frail consumer confidence.
The retailer said footfall was down by an average of 7 per cent during the period with its worst affected stores down by 14 per cent.
UK research director at GlobalData Retail Patrick O’Brien remarks on Moss Bros’ claim that the World Cup hindered its sales performance
Government figures earlier this week suggest fashion retailers were hard pressed during August as warm weather meant shoppers delayed refreshing their autumn wardrobes.
Brick went on to say that ‘early response’ to the autumn and winter ranges has been ‘strong’, but that Moss Bros ‘remain acutely aware that the highly competitive retail landscape is set to continue, alongside an unpredictable economic back-drop and increasing cost headwinds’.
‘As such, we have taken the decision to continue to invest and to deliver profit lower than expectations,’ he said.