Moss Bros profits look much smarter

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The Independent Online
THE RECESSION has not stopped men dressing up, judging by results from Moss Bros, which reported a three-fold rise in pre- tax profits to pounds 354,000 for the six months to 25 July.

Turnover at the menswear hire and retail group rose only marginally - by pounds 700,000 to pounds 23.95m - but the increase fed directly into operating profits as costs were held.

Terry Donovan, finance director, said that gross margins of more than 47 per cent on the extra sales fed straight through to the bottom line as a brake was put on overheads.

'We were determined not to sarifice margins to maintain sales,' he added. 'Allied to that, we've taken a rigorous approach to costs. For example, we review all vacancies in the group as they arise and look at the possibility of rationalisation.' Also, landlords were taking 'a more realistic view of rent reviews'.

Trading held up in the group's formal wear division, aided by the addition of eight shops that came with the acquisition of Dormie at the end of last year. Moss Bros now has 38 per cent of the hire market.

Although the group, which embraces such high street names as Cecil Gee, Suit Co and Savoy Taylors Guild, is sitting on an pounds 8.5m cash pile, Mr Donovan said there would be no rush for acquisitions.

'When the time is right, we will expand through organic growth, opening more outlets as consumer confidence picks up,' he said. 'We've got all the right ingredients to capitalise on the upturn when it comes.'

But trading remained flat at the moment. 'Clearly, Christmas and the New Year will be as important as ever but there is no sign of us coming out of recession. At one point, it looked like the North was more resilient but consumer confidence is pretty depressed in all geographical areas now.'

Earnings per share were 1.42p (0.41p) and the interim dividend was maintained at 1.5p. The shares closed unchanged at 120p.

David Stoddart, analyst at Strauss Turnbull, said he had increased his full-year profits forecast by pounds 100,000 to pounds 1.7m.

'It is not the most marketable of stocks but we think it is a long- term hold.'