A strong recovery at another retailer whacked by the first round of COVID infections and lockdowns in early 2020.
Sydney-based fashion wear retailer, Mosaic Brands told the ASX yesterday that it had seen a massive recovery in its earnings for the six months to December with the Noni B and Rivers owners telling investors its interim results would “materially exceed” expectations.
And the shares went mad, surging more than 32% to end the day at $1.155.
Mosaic now expects its earnings before interest, tax, depreciation and amortisation (EBITDA) to come in between $40 million and $45 million for the six months ending December 31.
This will be up 22% to 38% on the prior corresponding half, and a massive recovery from the retailer’s full-year results in August, when it reported an EBITDA loss of $45.8 million.
“The lift in EBITDA on the previous corresponding period) was inclusive of Job Keeper payments, the ongoing focus on margin improvement and the Group rapidly expanding its online offering,” the company said in Thursday’s statement..
Mosaic said it saw its largest ever lift in online trading with Black Friday sales up 100% percent on the previous year, with the Group now offering approx. 350,000 SKU’s online compared to 250,000 SKU’s three months ago (An SKU is a stock keeping unit, a number for product).
Group-wide online sales were up 31% on six months to December, 2019 and now represent about 17% of total turnover.
Mosaic Brands CEO Scott Evans said in the statement that that given the external challenges faced over the period, it was encouraging to see the continual month-on-month improvement in sales. Record Black Friday sales were followed by a solid Christmas trading period.
“As stated in 2020 we are seeing profound and permanent shifts in the retail sector,” said Mr Evans.
“We have moved swiftly to embrace this by realigning our rental costs, store footprint and rapidly building our online offer.
“A core strategy for the Group is also to focus on margin growth rather than chasing sales at any cost. This delivered an improvement on the -18.8% comparative sales in quarter one to finishing the half at -15%.
“There was a notable shift late in the trading period as our specific market segment avoided shopping centres due to renewed concerns regarding COVID-19. Despite this, overall December comparative sales proved resilient at 4% down on the previous year,” Mr Scott said in the statement to the ASX.
Mosaic said that cash holdings at December 31 were around $110 million or 124% on the prior year, Group net cash (netting out debt) was around $65 million, up sharply from $4.5 million at December 31, 2019.
Part of the reason for that would be the absence of any dividends paid in 2020 because of the trading losses and problems with COVID and the impact of the lockdowns (and the new accounting rules for leases).
