The heat is on as Moss Bros issues profit warning

Moss Bros became the second retailer in a week to blame a profit warning on unseasonably warm weather in the run-up to Christmas.

It was the menswear retailer's second such warning of its financial year and followed on the heels of Blacks Leisure, the camping specialist, which complained that a muggy December had hit sales at its Millets chain.

Despite analysts taking a knife to their profit forecasts, cutting expectations by up to one-third, shares in Moss Bros slipped only 1.25p to 74p. Speculation that Baugur, the Icelandic retailer, might bid for the retailer, which is worth around £70m, via its Unity Investments vehicle stopped the shares from falling further, analysts said.

Unity, which includes the retail entrepreneur Kevin Stanford and Iceland's FL Group, owns nearly 30 per cent of Moss Bros. Dawnay Day, which recently acquired Moss Bros's rival Austin Reed, was also tipped as a possible predator.

As Moss Bros has already indicated, its woes started with the World Cup last summer, which cost it £1.1m in lost sales because its core shoppers were glued to their television sets. It was then forced to move out of its warehouse in Stratford, east London, because it was situated in the Olympic development zone. The move went badly, disrupting eight weeks of its trading, its chief executive Philip Mountford said.

The final blow came with the run of mild winter weather that capped the warmest year on record in Britain in 2006. "Two-thirds of our lost sales in our second half are attributed to [not being able to sell] cold weather product," Mr Mountford said.

He said the group would overhaul the mix of lines in its shops for next autumn to include far fewer classic overcoats. As well as the Moss chain, the group owns the Cecil Gee and Hugo Boss fascias.

Richard Ratner, at Seymour Pierce, cut his annual pre-tax profit forecast to £3.7m from £5.4m. Last year it made £6.2m.

Mr Mountford said he still had the full support of the Moss and Gee founding families, who control about a third of the group.

It was not all gloom on the high street yesterday. JJB Sports reported a rise in sales and margins in a rare upbeat trading statement. The group, which is opening health clubs on top of some of its bigger sites, said like-for-like sales climbed 5.4 per cent in the five weeks to 31 December. Its gross margins improved by 210 basis points over the same period. Tom Knight, the chief executive, said: "Unusually for retail, most of the things we tried to do worked."

The group said it was on track to meet the City's profit expectations, prompting its shares to rally 11p to 240p.

In contrast to its main rival, Mike Ashley's Sportsworld, JJB is trying to reposition itself as a serious sports retailer, rather than a chain of shops selling fashion leisurewear. Sportsworld's stores have become even more eclectic than usual of late, offering a selection of YSL-branded lines.