Women’s fashion retailer Mosaic Brands has sprung a major shock in its 2019-20 results by revealing a wide-ranging restructuring program that will see up 500 outlets shut, with hundreds of jobs to go as a result.
Mosaic, which has chains like Noni-B, Rivers, Millers and Katies, revealed a massive $212 million loss thanks to the COVID-19 pandemic.
The news saw the shares plunge more than 26% to 50 cents in a stock exchange equivalent of a bloodbath for investors.
The company and its chains are a glaring exception to the generally good news for retailers from the COVID-19 pandemic – JB Hi-Fi, Super Retail, Bapcor, Coles Group, Bunnings and Officeworks, Shaver Shop, Premier Investments, and Foot Locker have all reported solid rises in sales and profits.
Retail sales in July rise 3.3% and were up more than 12% from the same month in 2019 thanks to the solid rises in April, May, and June.
Many bricks and mortar retailers have also reported big rises in online sales, even in the footwear and fashionwear segments where Mosaic is strong.
Mosaic’s CEO Scott Evans told a briefing on Tuesday the company had been “utterly derailed” by the coronavirus pandemic.
Mosaic reported a statutory loss before tax of $212.1 million, against 2018-19’s statutory profit of $11 million. The huge fall was partially due to $113.5 million in impairments of the company’s brand names and other goodwill.
Revenue fell 16.5% to $736.7 million. The retailer did not declare a final or an interim dividend. It paid a total of 14.5 cents a share for 2018-19.
Mosaic said its underlying earnings before interest, tax, depreciation and amortisation (EBITDA)slumped to a loss of $45.8 million, which included a provision of $49 million for unpaid rents, though the company expects that amount to be “materially lower” due to ongoing negotiations.
Part of those negotiations will see Mosaic shut between 300 to 500 stores over the next two years, with the company saying 41% of its current leases were on holdover, and 81% expire in the next two years.
The company is already in dispute with major mall companies, especially Scentre (which yesterday revealed a near $4 billion loss and the creation of a provision for unpaid rents and bad debts of $230 million – see separate story).
“The retail rental market in Australia is not paused because of the pandemic – it is fundamentally changed for the future. Some though not all landlords accept that reality,” Mr. Evans said. “Shuttered stores work for no one so we aim to minimise closures, but not on uncommercial terms.”
Mosaic has been one of the retailers hardest hit by the coronavirus pandemic as its customer base is largely older Australian women, a demographic both susceptible to COVID-19 and less inclined to shop online.
