Mosaic Brands had a strange update yesterday for the AGM – it was more about store closures than new details on how the company was trading.
Ahead of AGM, the company (which owns the Noni B and Rivers and Millers chains) informed investors of its progress on its store closure program, with 73 stores having been shut since August.
At its full-year results earlier this year Mosaic reported a $200 million loss (because of the new accounting standard for the cost of leases) and said it would plan to shut between 300 to 500 stores in response to the COVID-19 pandemic.
Now CEO, Scott Evans says the company now expects up to 250 more stores to close before June next year due to “unrealistic rental requests and a permanent shift towards online purchases.”
“Our online sales for the first quarter are up 31 percent on the previous corresponding period, with the amount of SKUs or items available on our websites growing from 150,000 to over 250,000 in just eight weeks,” Mr. Evans said in Thursday’s update.
He said gross profit margins were now at 67%, up from 61.8% for the prior year, though the company did not provide any detail on sales, noting revenue and profit had taken “a back seat”.
“We’re encouraged that a number of landlords have in recent weeks come to the table on rental reductions but not all have and we expect up to a further 250 store closures by June 2021,” he said.
Chairman Richard Facioni said the pandemic had forced a large number of the brands’ five million plus in-store customers into hibernation over the past eight months.
“We’ve found ourselves in an unfamiliar position, for any retailer, where our customers have wanted to visit our stores but couldn’t – and we’re saying by and large that’s been for the best,” he said.
“With most restrictions lockdowns now lifted we are confident those customers will stir from that hibernation and resume visiting our loyalty brands.
Despite this, Mosaic expects to return to profitability by next year subject to a strong Christmas trading period.
Shares in the firm were last down 5% at one stage yesterday before bouncing a little to end at 63 cents, steady on the day which was an OK outcome given the wider sell-off that saw the ASX 200 lose 1.6%.
