Shares in Moss Bros fell sharply yesterday after the menswear chain became the latest high street retailer to issue a profits warning before the crucial Christ-mas period.
The group, which lost 800,000 in the first half of the financial year, said low levels of footfall in the past seven weeks, as shoppers shunned the high street, means it is unlikely to meet full-year profit expectations.
Its chief executive Philip Mountford said trading had been tough across the group's divisions, including its Hugo Boss franchise. "It's a fundamental issue out there on menswear," he said. "I said last Christmas that it was the toughest trading period I had experienced in 20 years in the business, but this is tougher." He said he couldn't see how it would get considerably better than current trading, adding: "It is going to be difficult."
Moss Bros had been expected to reach annual sales of 144.97m and pre-tax profit of 3.8m. The company said that, despite a good start to the second half, recent trading had been poor. In the 18 weeks to 1 December, like-for-like retail sales dropped 1.5 per cent while total sales were down 3.7 per cent. its shares at one stage fell 7 per cent to 35.5p, but recovered to close at 36.5p.
Moss Bros, which also hires out formal wear for weddings and other special occasions, has been hit by recent moves by rivals into its territory. Asda has introduced a tuxedo for an astonishing 35, cheaper than most would be to hire, while Tesco, H&M and Marks & Spencer are all offering low-value suits.
Mr Mountford admitted "all have chipped away at parts of our business". He said the company had changed strategy nine months ago in response, and would instead be focusing more on higher-end suits in the 250-plus ranges, by Calvin Klein, French Connection and Canali among others. This change of focus should show through by next spring and summer, he said.
Mr Mountford added that the company had been prudent on stock control and has far less than last year. "This means we won't have to slash and burn to get out of that critical period," he said.
Despite the gloom, David Stoddart, an analyst at Landsbanki, said Moss Bros's strong balance sheet "leaves it far better positioned to weather this storm than many of its competitors ... It should prove a long-term winner".
However, the profits warning is seen as a further blow to the retail sector. Already reeling from a poor summer as rain forced many stores to bring sales forward, it is now bearing the brunt of a consumer slowdown as successive interest rises start to bite.
Earlier this week, ScS Upholstery, Regent Inns, the owner of the Walkabout chain, and Clapham House, the restaurant group behind the Gourmet Burger Kitch-en, all warned of a slowdown in sales, while the British Retail Consortium said total retail sales grew just 1.8 per cent in November, compared with 2 per cent in the same month last year.Reuse content