Smarter fashions suit Moss Bros
The Investment Column
Pre-tax profits in the six months to July soared by 54 per cent to pounds 4.94m. Current trading is also strong with like-for-like sales 11 per cent ahead of the same period last year.
At first glance, the reason for this stellar performance is something of a mystery. Its brands such as The Suit Company, Cecil Gee and Savoy Taylors Guild do not immediately stand out as world beaters. And though retail fortunes are improving, the high street remains fiercely competitive.
But Moss Bros has been helped by a number of factors. First, the increasing popularity of suits has boosted sales at the company's different store formats. The hire of formal suits through its Moss Bros chain has also been strong. Management keeps a tight rein on costs and is clever with regular promotions that have not dented margins.
There remains plenty of room for expansion. Five shops opened in the first half, taking the total to 160. A further 11 will open in the second.
The recently acquired Blazer chain, which made a small loss in the first half, will be doubled in size to around 50 stores. It should make a profit contribution in the full year. The excess of sites vacated by the likes of Liberty and the collapsed Facia group should help Moss Bros' negotiating power with landlords.
Moss Bros' dapper managing director, Rowland Gee, was doing his best to dampen down over-enthusiasm yesterday, noting that the high street remains a challenging place and that consumers remain cautious
But analysts were undeterred, increasing forecasts to pounds 15m for the full year, which puts the shares on a demanding rating of almost 23. The worry is management may get carried away and over-stretch themselves with a larger acquisition. There were rumours a few months ago that Moss Bros may pounce on Austin Reed, though this was before the pounds 7m purchase of the Blazer stores from Storehouse.
And impressive though the company's performance has been, the shares' strong run leaves little room for error. Moss Bros remains a quality company but the safest course is to take some profits.
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