For all the optimism about the way some retailers are riding out the COVID-19 storm, yesterday Mosaic Brands provided us with a timely reminder from one of the hardest-hit sectors – clothing – about the deep damage done so far.
March retail sales data released on Wednesday by the Australian Bureau of Statistics showed clothing, footwear and personal accessory retailing experienced a fall in sales of 12.1% in the March quarter while sales through department stores dropped 5.2%.
For March alone the damage was greater – sales through clothing, footwear, and personal accessory retailers fell 22.6% while there was an 8.9% drop in department store sales.
Fashion retailer Mosaic Brands runs the Rivers, Noni B, Millers, and Katie’s chains across Australia and on Thursday told the market in an update that investors can expect a full-year loss thanks to the coronavirus pandemic.
Directors said in the statement that the second half trading loss will be more than its first-half $32.7 million gain in earnings before interest, tax, depreciation, and amortisation (EBITDA).
The retailer will also not declare an interim dividend, which it had deferred in March. Presumably, that also means there won’t be a final payout for the year to June.
Mosaic told the ASX that it expects to return to profitability in the 2020-21 financial year.
Mosaic said there had been a more than 80% lift in online sales in the six weeks the stores have been closed compared with the same period in 2019.
Mosaic will also progressively reopen its 1400 stores from next Monday onwards after a six-week-long shutdown.
Stores were first shut on March 26, and trial locations have been opened over the past week.
Some locations may not reopen, however, as the company warned it would only resume trading in sites where “satisfactory commercial terms are agreed with the landlord”.
But Mosaic said in the statement yesterday that it “is committed to working with its landlords to resume normal trading as soon as it is viable to do so and to provide a safe and improved shopping experience for customers.”
Investors loved the update, sending Mosaic shares up 22% on the day to 70 cents. That’s the highest they have been since March 16.
