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Moss Bros prepares for challenging market after profit falls
Moss Bros said it was planning for a very difficult trading environment after stock shortages and weak customer footfall caused annual profit to fall.
Pre-tax profit for the year to 27 January fell 6.1% to £6.7m as revenue rose 3% to £131.8m. Financial performance was strong during the first half but worsened towards the end of the year, the men's clothing retailer and hire company said.
Moss Bros suffered stock shortages caused by a botched attempt to reduce its number of suppliers to offset rising costs caused by the weak pound. Customers also stayed away from its stores in December as consumers felt the pinch from squeezed incomes.
Investors were prepared for grim results after two profit warnings in January and on 21 March, when Moss Bros said results for the current year would be well below market expectations. Moss Bros suffered along with other clothing retailers in what Next has described as the most difficult year for a quarter of a century.
Brian Brick, Moss Bros's chief executive, said the range for spring and summer had been well received but that lack of stock meant retail sales at stores open a year or more had fallen this year.
The company, which had been one of the UK high street's success stories, said it faced pressure on costs from higher wages, business rates and product prices.
Brick said: "It is frustrating that after a strong first half performance, which continued into the third quarter of the year, the final quarter's performance was below the level we had forecast. We are planning for an extremely challenging retail environment, not least because of the uncertain consumer environment and significant cost headwinds.
"However, there is no question that we have hampered our own position through the stock shortages and as this gets back on track, our strong consumer proposition is restoring momentum."
As previewed in its March profit warning, Moss Bros cut the final dividend to 1.97p a share from 3.98p, reducing the full-year payout to 4p from 5.89p. The company's shares, which have roughly halved in value this year, fell 2.8% to 45.4p at 09:12 GMT.