The Investment column: Moss Bros surges ahead of rivals

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The Independent Online
Men are a nightmare for fashion retailers. Unlike women, the average man rarely buys clothes on impulse and when he is finally forced into a shop, he gets all tight-fisted about opening his wallet. Burton have been complaining about the difficult menswear market for years. How is it, then, that Moss Bros, a pure menswear retailer, keeps doing so well?

Profits in the half year to July rose 17 per cent to pounds 5.8m, boosted by Blazer bought last year, with turnover 26 per cent up to pounds 61m. In a menswear market creeping ahead by just 3 per cent a year, Moss Bros' 7 per cent like-for-like sales growth in the first half, maintained in the current period, is impressive stuff. With zero price inflation in menswear, most of that is volume.

Mens' suits, the core of Moss Bros' business at 40 per cent of turnover, is the key. Moss Bros has been growing its slice of the pounds 600m UK suit market steadily over the past five years at a time when Burton has struggled to maintain its position and Marks & Spencer's share has hardly changed. Rowland Gee, Moss Bross's managing director reckons the group can achieve 15 per cent market share by 2000 purely through organic growth. The group's success in suits hinges on two factors - its wide choice of labels and management's conservatism. Unlike Burton and M&S's own-label offering, Moss Bros gives customers a huge choice of styles and labels - such as Savoy Taylors Guild classics, Cecil Gee fashion and Yves Saint Laurent mainstream. And while many menswear retailers are chasing the latest fashions, Moss Bros has stuck with suits.

There is more growth to come. Mr Gee has his eye on 40 prime sites, which, if the land prices are right, means 10 new stores a year. He is also flirting long-term with the idea of mail order and selling through third parties in Western Europe. House broker SBC Warburg forecasts pounds 19m full- year profits. Eighteen times is no bargain, but the share price should keep going up.