Moss Bros suits City with strong advance: Share price jumps as sales boost leads to 77% gain
Rowland Gee, chief executive, estimates that the group's three chains, Cecil Gee, The Suit Company and Savoy Taylors Guild, account for one suit in every 18 sold - 6.5 per cent of the market, up from 5.5 per cent last time.
That was reflected in an 11 per cent rise in sales to pounds 62.1m for the year to January - or a 12.5 per cent rise after adjusting for the extra week's trading in 1993. Profit before tax jumped 77 per cent to pounds 4.1m. The result was better than the market had expected and the shares rose 46p to 325p.
Mr Gee said the sales increase had continued into the current year. But he warned that it was too early to tell whether the tax rises would have an impact. 'Consumer confidence is still very delicate.'
He attributed the improvement in profits to increased productivity and cost control. The gross margin was held at about 50 per cent, while costs had increased by just 2.5 per cent. Sales per employee were about 20 per cent above the previous year's.
Moss Bros converted 11 of its Suit Company stores to the more upmarket Savoy Taylors Guild in areas such as Tunbridge Wells in Kent, where the population is relatively well-heeled. A further five conversions are planned this year. The group is able to add Moss Bros hire departments to the stores, and these now operate in 78 of the 101 outlets.
The conversions, with other refurbishments, meant that capital spending was pounds 2.3m, three times the level in 1993. Plans to open a further six stores by the autumn will keep spending at about that level. The group's cash balance rose from pounds 14.4m to pounds 15.5m but lower interest rates brought a pounds 233,000 drop in interest receivable to pounds 700,000.
Mr Gee said the money would be used to expand the core business. 'We are not going to go out and buy someone else's failed brand.'
Settlement of a dispute with the Inland Revenue brought in a pounds 636,000 tax repayment, giving earnings per share of 18.86p, up from 8.52p.
The final dividend is increased by 37.5 per cent to 5.5p, making 7p (5.5p) for the year.
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