“Shares in Moss Bros plunged on Wednesday after the suit hire firm warned on profits.
The retailer said the bottom line for the current financial year would be “materially lower” than expected.
Shares fell by as much as a third before recovering to be 20% lower at 47p, valuing the company at less than £50m.
Moss Bros blamed the warning on stock shortages, sluggish demand for suit hire and lower consumer confidence.
Chief executive Brian Brick said the start of 2018 had been hampered by short-term stock delivery issues.
“The resulting stock shortage has undoubtedly driven a significant shortfall in sales, which will continue until late spring,” he said.
“Although this has been a painful experience, I am confident that the availability issues are well on track to being resolved and the margin benefits from the consolidation will flow through.”
Mr Brick said the year ahead for retail would be “a very challenging one”.
Moss Bros has 129 stores across the UK.
Its problems are another example of the pressures facing many well-known names on the high street, including New Look, Carpetright and Mothercare.”
Source – BBC News
Excerpt From Moss Bros RNS:
“Following a review of projections for the year ending 26 January 2019, the Board now anticipates that the Group will deliver profit at a level materially lower than current market expectations.
The Group does not anticipate any change to the previously announced expectations for the results for the 52-week period ending 27 January 2018, which will be announced on 27 March 2018 as planned.
The change in current expectations reflects the following main drivers:
- Following the consolidation of the Group’s supplier base in response to Sterling weakness, there have been material short-term issues with the resulting availability of stock. This stock shortfall across all categories has had a negative effect on sales in all retail channels and will continue to do so until late Spring.
- Hire sales continue to be challenging, although the peak trading period for Hire is still to come. As such the Group has remained prudent in its outlook.
- The reduction in store footfall that was experienced towards the latter part of December, has continued, reflecting a more cautious consumer environment.
Whilst Moss Bros now anticipates lower full year sales as a result of the above issues, it is important that we continue to increase our investment in key areas of future growth, most notably our Ecommerce business, our product development, the customer experience and our Tailor Me proposition, which remains on plan. Our offer is strong, we continue to achieve traction from our investments in the business and we are confident that the business will return to strong growth.
As a consequence of this revised view on FY18/19 results, the Board has reviewed its approach to dividend. The Group has a strong balance sheet but, given the more challenging trading environment, the Board is taking a prudent approach to capital management and has decided to modify the existing dividend policy to ensure that we are able to fully cover our future dividends with profits in FY20/21 and onwards. The Board will therefore be recommending a final dividend of 1.97p, meaning a total FY dividend of 4p per share for FY17/18 (5.89p FY16/17).”