Moss Bros cuts dividend after tough end to 2017 as stock shortages hit sales

The retailer has been struggling to deal with stock shortages and poor trading in December

Moss Bros issued a profit warning last week and today announced a drop in earnings (PA)

Suits specialist Moss Bros has reported a drop in earnings and profit in 2017, blaming a “tough end to the year” and stock shortages which hurt sales.

The firm, which issued a profit warning last week, posted revenue of £132m for the year to 27 January 2018, up from £127m the year before. Like-for-like sales rose 1.6 per cent, against a rise of 5.3 per cent this time last year.

Pre-tax profit dropped 6.1 per cent from £7.1m to £6.7m, and basic earnings per share fell by 3.3 per cent to 5.33p.

The company cut its final dividend to 1.97p, bringing the total dividend for the year to 4p, compared with 5.89p issued last year. According to Moss Bros, this cut “reflects a prudent approach to capital management, modifying the existing dividend policy to ensure we are able to fully cover our future dividends”.

The firm blamed a tough end to the year, highlighting poor December footfall, for the dip in figures. Chief executive Brian Brick said: “It is frustrating that after a strong first half performance, which continued into the third quarter of the year, the final quarter's performance was below the level we had forecast.

“We suffered from a significant stock shortage, due to the poor implementation of the project to consolidate suppliers. We left ourselves with too little 'running line' stock to close out the year having bought cautiously for the second half of 2017. This has continued to hamper our performance into the start of the year.”

Moss Bros said trading performance in the year so far has “suffered significantly” from stock shortages, which was also flagged in the profit warning released by the group last week, and the firm said it is preparing for further hardship in the near future.

“Going forward, we are planning for an extremely challenging retail environment, not least because of the uncertain consumer environment and significant cost headwinds,” said Mr Brick.

“However, there is no question that we have hampered our own position through the stock shortages and as this gets back on track, our strong consumer proposition is restoring momentum. We will ensure that we continue to invest in this proposition to protect our position.”

Shares in the group rose more than 2 per cent at the open.