Shares in Moss Bros Group were up by more than 4% this morning (11 January) after the men’s wear retailer hailed an improving trend in the fourth quarter, despite a slip in half-year like-for-like sales due to deeper discounting.
In its trading update for the 23 weeks to 5 January, the company said it continued to make progress in a tough marketplace, having fully resolved the stock issues that the business faced with its supplier consolidation in the first half of the year.
Total sales were 0.6% ahead of last year, but fell 1.0% on a like-for-like basis. Total retail sales, including e-commerce, comprised 91% of group revenue during the 23 week period – rising 1.9% versus the same period last year. Hire sales, which account for less than 10% of group revenue, fell 11.2% on a like-for-like basis.
Overall, gross margins fell by about 2.6% on last year, due to increased promotional activity, particularly from late October onwards. The period post Black Friday required deeper discounting than planned, Moss Bros said, in order to remain competitive.
The group expects to meet its current revised market consensus of an adjusted loss of GBP0.6m (US$765,848).
CEO Brian Brick said “tactical, discount-led pricing” proved successful in delivering top line sales growth, although “there has been an expected negative impact on gross margin rates, which ensured that the group managed the level of terminal stock.”
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Sofie Willmott, senior retail analyst at GlobalData, notes that “although discounting is set to continue this year as retailers attempt to convince shoppers to purchase, Moss Bros should focus on driving differentiation in its range and offering great service in stores to emphasise its specialist credentials and justify selling its products at full price, reassuring customers that it provides value for money.”