Moss Bros swings to annual loss in 'challenging' conditions

Shares in Moss Bros slumped on Tuesday after the menswear specialist scrapped its final dividend as it said it swung to a full-year loss in "challenging" conditions and struck a cautious note on the outlook.

In the 52 weeks to 26 January, the company swung to an adjusted pre-tax loss of £0.4m from a profit of £6.7m the year before, with total group revenue down 2.1% to £129m.

Group like-for-like sales declined 4.3% to £140.2m compared to a 1.6% increase the previous year, while LFL retail sales including e-commerce were 3.6% lower versus a 2.9% rise the year before. LFL sales in the hire segment were down 9.3%, accelerating from the 6.2% drop seen the year before.

The group said it had experienced a "challenging" year, impacted by both internal and external factors. In the first half, early season shortages in spring 2018 caused "significant" trading issues, which were resolved by April. However, footfall then took a hit from abnormally cold and then hot weather and as sporting event success distracted customers from shopping across the summer.

During the second half of the year, particularly post Black Friday, there was a positive customer response to deeper discounting as Moss Bros actively looked to ensure that it maintained its 'share of voice' in an increasingly promotion driven marketplace. However, gross profit was dented as a result.

The company said trading in the first eight weeks of the new financial year has strengthened overall but remains volatile. Total sales are up 3.6% on last year thanks to growth in the e-commerce and wholesale channels, while retail LFL sales including e-commerce are up 3.9%.

Chief executive officer Brian Brick said: "It has been an extremely challenging year for the business on many fronts, but I am confident that we have made significant progress in a number of areas of the business. However, it is disappointing to be reporting an adjusted loss before tax for the group for the first time since 2010/11.

"Looking forward, in common with many UK retailers, we continue to anticipate an extremely challenging retail landscape, particularly within our physical stores, as a result of reduced footfall and rising costs. Alongside the macro trend of more retail transactions moving online, we expect the uncertain consumer environment and significant cost headwinds to continue."

At 1005 GMT, the shares were down 5.5% to 22.64p.