After being the first listed company to issue a warning about the impact of the bushfires on its business in December and January, fashion retailer Mosaic Brands has gone further and postponed its interim dividend until it has a better idea of how the impact of the coronavirus on the company in coming months
The company –which owns fashion brands such as Noni B, Rivers, and Katies – said its supply chain has seen a “minor impact” for deliveries in February as production levels remained low due to thousands of closed factories.
The shares copped a pounding, plunging (especially in the afternoon) falling nearly 21%% to $1.42.
“The group is now working with its suppliers to ensure minimal delays for winter product. Should delays prove to be material, sales during the early winter season, including the key Mother’s Day period, could be affected,” Mosaic warned.
“In view of this uncertainty, the board has decided to take a prudent approach and postpone its decision on declaration of an interim dividend until the impact of the COVID-19 has been clarified.”
If there’s no material impact, Mosaic expects to announce an interim dividend around 9 cents a share. If paid, that would be unchanged from the interim payout for 2018-19.
In its results released on Tuesday, Mosaic confirmed the bushfires hit hard, especially in December and the vital lead up to Christmas. The fires hit hard in regional Victoria and NSW where the company has several hundred of its outlets.
Revenue fell 10.9% to $413.8 million, and gross earnings fell 6% to $247 million.
Net profit after tax also rose (as suggested in the January update), rising to $14.1 million.
Mosaic Brands’ managing director and chief executive Scott Evans said he was pleased with the progress made during the half, though said it was “unfortunate” that the bushfire crisis has overshadowed the company’s results.
Weak consumer demand continued into January, the company warned, though it improved in recent weeks.
Mosaic also made it clear analysts were being too optimistic in forecasting $75 million in full-year earnings before interest, tax, depreciation and amortisation (EBITDA), for the year to June.
While it did not provide updated guidance, directors said they believed it would be “unhelpful” to do so.
