Moss Bros still looking good

INVESTMENT COLUMN

Figures from Moss Bros looked as sharp yesterday as the company's best morning dress. The remarkable recovery story over the past three years continued in the first half of the year to July, with profits up two-thirds and earnings and the dividend keeping pace.

The performance of the share price has not quite been in the same league as at Next, but having risen from just over 100p at the beginning of 1993, yesterday's 7p rise to 570p topped off a sparkling run.

Pre-tax profits of pounds 3.21m compared with last year's first-half pounds 1.92m, struck from a 20 per cent increase in sales from pounds 30.1m to pounds 36.1m. Encouragingly, like-for-like sales, before taking account of the seven shops opened in the period, rose 10 per cent as the company continued to take market share off its competitors.

Moss Bros's share of the suit market has doubled over the past five years to about 8 per cent and 15 per cent is targeted.

What was really pleasing about the figures was the way Moss Bros has managed to maintain its gross margin despite an ambitious expansion programme. Since the merger with Cecil Gee, costs have been kept well under control.

The difficulty with recovery shares, such as Moss Bros, is deciding at which point all the good news is finally in the price. On the basis of forecast pre-tax profits this year of pounds 9.5m, and earnings per share of 37.5p, the shares stand on a prospective price/earnings ratio of 15. That is marginally lower than the rest of the stores sector and still good value.

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