12th Oct 2006 07:01
Moss Bros Group PLC12 October 2006 INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 JULY 2006 HIGHLIGHTS Financial • Pre-tax profit of £0.8m (last year £1.7m).• Revenue of £63.3m (last year £62.4m): like for like revenue down 0.72%.• Gross profit percentage increased from 53.1% to 53.5%.• Operating costs +3.2% (controllable costs - 0.1%) like for like.• Average cash balance £8.4m (last year £6.8m).• Nine new Moss stores opened in the first half.• Two new Hugo Boss stores at Manchester (Trafford Park) and Sheffield (Meadowhall).• Current trading: revenue in the first 10 weeks of the second half +2.9%, like for like flat. Margin growth of 0.7 percentage points.• Michael Hitchcock appointed Finance Director.• Interim dividend 0.5p (last year 0.5p). Commenting on the results, Philip Mountford, Chief Executive, said: "The results for the first six months were in line with expectations followingour pre close statement made on 8th August. The menswear retail sectorexperienced a generally challenging environment during this period. The fall inlike for like revenues followed seven consecutive half year periods of like forlike growth. These results have also been affected by a significant increase inproperty and utility costs, which disproportionately affect the first half,which has lower sales than the second half. "Trading in the first ten weeks of the second half has not shown the growth inrevenues we anticipated. There have however been improvements in gross marginand Fashion in particular has achieved good growth. The inventory and cashpositions have continued to be satisfactory and during the first six months wehave moved to our new distribution centre, and operations have now stabilised. "Nevertheless the performance of Moss has not been satisfactory and to addressthis I have taken direct responsibility for its operations, merchandising andbuying activities until Moss is back on plan. In the current tough competitiveenvironment the vigorous actions necessary to improve the Moss performance arenow being taken. It takes time to recover from problems in retailing but thebalance of the year of 16 weeks normally represents 40% of our total sales andprovides an opportunity to regain momentum. "We have appointed Michael Hitchcock as our new Group Finance Director. Michaelhas a strong record working in the retail sector most recently at Ottakars andwe are looking forward to benefiting from his experience in the future." For further information please contact: Moss Bros Group Plc Telephone: 0207 447 7239 Philip Mountford, Chief ExecutiveDiana Whitehead, Group PR Manager High resolution images are available for the media to view and download fromwww.vismedia.co.uk INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 JULY 2006 In line with general retail sales trends, the Company experienced a challengingfirst six months of the year. Trading conditions were tougher than had beenpreviously expected and this was reflected in the fall in like for likerevenues, which follows seven consecutive half-year periods of like for likegrowth. Revenues for the 26 weeks increased by 1.4% on last year but like for like saleswere down 0.72%. Gross profit for the half was up 2.2% and margin increased to53.5%. Trading Results 2006/07 2005/06 ------------------------------------------- 1st Half 1st Half 2nd Half--------------------------------------------------------------------------------Sales v last year (like for like) -0.7% +2.8% +2.3%% Gross profit 53.5% 53.1% 52.8%% Gross profit v last year (% points) +0.4% +1.0% +0.4%--------------------------------------------------------------------------------Operating profit £m 0.6 1.5 4.4------------------------------------------------------------------------------- Moss (118 stores) traded broadly in line with general trends in the menswearsector, and has seen like for like revenue slip 1.6% whilst achieving marginpercentage growth ahead of last year up 0.5%. The improvement in margin came from the improved intake margin generated by thenew supply chain initiatives as well as lower markdowns on the back of improvedsell-through of the Spring/Summer ranges. Margin was helped by the developmentof own brands including Ventuno 21, Blazer and Dehavilland - which now represent48.6% of the Moss business. Suit sales continue to show good growth up 7.7% and dresswear is up 9.2% showinga continuing strong return to formal dressing. Casualwear for the first time in seven seasons has seen a dip in sales. TheSpring/Summer collection did not appeal to the customer and we have aggressivelycleared the product. The reaction to the Autumn/Winter collection issignificantly stronger and casualwear remains a key element to the business. The Moss brand remains committed to offering customers good quality brandedproduct at competitive prices. The brand has seen strong growth over the lastfour years and the commitment to product and the strategy to grow the brandcontinues. The refit programme is continuing with increasing focus being given to the newstore format, which is being developed to provide a bright and invitingenvironment with clear brand zoning. The first Ventuno 21 shop-in-shop will beopened in the new Cardiff concept shop, which opens later this year. Sales in factory outlets continue to grow delivering positive profitcontributions in the first half. The growth in margin being achieved furtherestablishes the outlets as an extension to the high street. During the firsthalf, Street was opened and further opportunities are being explored. Philip Mountford has taken direct control of Moss, overseeing operations andbuying; David Pidgeon has left the business. Fashion sales were up 0.7% like for like on last year and margin improved 1.0%.The focus now given specifically to this part of the business is providingrenewed enthusiasm for the brands. Cecil Gee (18 stores) rolled out its new concept to a further two stores in thehalf year. A total of five Cecil Gee stores have now been refitted within thelast 18 months. A number of new power brands have been recruited by the Cecil Gee fascia, suchas Diesel and Replay. These will help drive sales in the second half. Hugo Boss (13 stores) revenues were up 2.5%; the Company opened one new store inTrafford Park, Manchester that is trading ahead of expectation. Since the end ofthe first half a new store has also been opened at Meadowhall, Sheffield. Canali has had a strong finish to the half in spite of being partly closed for11 weeks during a major shop refit. Revenues post refit have increased +41%. Total operating costs were up 5.3% on last year; after adjusting for the impactof new and closed stores, like for like operating costs were up 3.2%.Controllable costs were down 0.1% like for like, however, the significantincreases in property and utility costs were reflected in the increase in fixedcosts up £1.1m (6.6%) like for like. This increase in fixed costs has had adisproportionate impact on the profits for the first half of the year, which haslower sales than the second half. Cash Flow The Company's cash position continues to improve: the average cash balance inthe first half of £8.4m was £1.6m up on the first half of last year. The cashbalance at the end of the first half increased by £0.4m to £10.7m. Capital expenditure in the half was £4.8m, an increase of £2.3m on last year. Ofthis, £1.4m was spent on opening nine new Moss stores and the Hugo Boss store inTrafford Park Manchester. These stores are forecast to achieve positivecontribution this year: Hugo Boss in Trafford Park has already seen significantcontribution since it opened in March. £1.8m has been spent in the first half onthe relocation of the distribution centre from Stratford to Barking which islargely covered by compensation payments received. The majority of the remainingcapital expenditure was spent on refitting several stores, which have seen, onaverage, a 12% sales lift post refit.The Canali store benefited from a £0.5m refit. Sales post refit have exceededexpectations with sales gains of 41%. Following the successful launch of the Cecil Gee concept stores in Brent Cross,Gateshead, Lakeside and Edinburgh, a further £0.4m has been invested inrefitting the Bluewater store. Further expenditure is planned on refitting two major Hugo Boss stores, twooutlets and at least six Moss stores during the second half. The Distribution Centre at Stratford has been vacated to make way fordevelopment work on the London 2012 Olympic site and the business has moved to anew purpose built facility at Barking. Inventory at the half year was up 5% on July 2005 on retail space up 8% andterminal inventory has continued to be successfully cleared throughout theperiod. Earnings Per Share and Dividend Basic earnings per share were 0.61p against 1.29p last year. The Board is recommending an interim dividend of 0.50p per share (2005/06interim 0.50p). This will be paid on 22 November 2006 to shareholders on theregister at the close of business on 20 October 2006. Outlook The UK menswear sector remains challenging and highly competitive. Sales growthin the first 10 weeks of the second half have improved relative to the first 26weeks with like for like retail revenues flat but margin has improved by 0.7percentage point. The cash and inventory positions remain satisfactory. The management teamremains focused on driving like for like sales growth in the last quarter of theyear and has taken the necessary actions to regain momentum. CONSOLIDATED INCOME STATEMENT 6 months to 6 months to Year to 29 July 06 30 July 05 28 January 06 £'000 £'000 £'000 ------------------------------------------Revenue 63,272 62,377 132,813 Cost of sales (29,441) (29,280) (62,552) ------------------------------------------Gross profit 33,831 33,097 70,261 Administrative expenses (2,199) (2,404) (5,189)Shops' selling and marketing costs (31,013) (29,147) (59,170) ------------------------------------------Operating profit before financingincome 619 1,546 5,902 Financial income 186 158 305 ------------------------------------------Profit before taxation 805 1,704 6,207 Taxation (241) (526) (1,958) ------------------------------------------Profit after taxation 564 1,178 4,249 ------------------------------------------ Basic earnings per share 0.61 p 1.29 p 4.62 pDiluted earnings per share 0.60 p 1.25 p 4.54 p CONSOLIDATED BALANCE SHEET As at As at As at 29 July 2006 30 July 2005 28 January 2006 £'000 £'000 £'000 ---------------------------------------------AssetsProperty, plant and equipment 22,076 21,122 21,059Lease prepayments 3,115 2,386 2,919 ----------- ---------------------------------Total non-current assets 25,191 23,508 23,978 Inventories 23,666 22,449 21,704Trade and other receivables 6,233 5,163 7,310Cash and cash equivalents 10,662 10,250 17,655 --------------------------------------------- Total current assets 40,561 37,862 46,669 ---------------------------------------------Total assets 65,752 61,370 70,647 --------------------------------------------- EquityIssued capital 4,678 4,603 4,652Share premium account 8,400 8,028 8,316Retained earnings 37,672 35,540 38,320 ---------------------------------------------Total equity 50,750 48,171 51,288 --------------------------------------------- LiabilitiesOther payables 1,400 971 1,249Deferred tax liabilities 2,626 952 2,385 ---------------------------------------------Total non-current liabilities 4,026 1,923 3,634 --------------------------------------------- Trade and other payables 10,976 11,276 15,725 ---------------------------------------------Total current liabilities 10,976 11,276 15,725 ---------------------------------------------Total liabilities 15,002 13,199 19,359 ---------------------------------------------Total equity and liabilities 65,752 61,370 70,647 --------------------------------------------- CONSOLIDATED STATEMENT OF CASHFLOWS 6 months to 6 months to Year to 29 July 2006 30 July 2005 28 January 2006 £'000 £'000 £'000 ---------------------------------------------CASHFLOWS FROM OPERATING ACTIVITIES Profit before taxation 805 1,704 6,207Adjustments for:Profit on sale of non-current assets (443) (86) (31)Interest received (186) (158) (305)Depreciation 2,368 2,101 4,233Equity settled share-basedpayment expenses 87 48 125Decrease/(increase) intrade and other receivables 1,077 877 (1,270)Increase in inventories (1,962) (1,092) (347)Decrease in trade and other payables (4,624) (6,814) (2,046)Tax refunded/(paid) 25 - (25) ---------------------------------------------Net cash from operating activities (2,853) (3,420) 6,541 --------------------------------------------- CASHFLOWS FROM INVESTING ACTIVITIES Proceeds from sale of non-current assets 600 100 100Proceeds from sale of investments - - 90Interest received 186 158 305Compensation foracquisition of non-current assets 1,071 - -Acquisition of non-current assets (4,808) (2,488) (5,160) ---------------------------------------------Net cash from investing activities (2,951) (2,230) (4,665) --------------------------------------------- CASHFLOWS FROM FINANCING ACTIVITIES Proceeds from the issue of share capital 20 - 337Dividends paid (1,209) (915) (1,373) --------------------------------------------Net cash from financing activities (1,189) (915) (1,036) -------------------------------------------- Net (decrease)/increase incash and cash equivalents (6,993) (6,565) 840Cash and cash equivalentsat beginning of period 17,655 16,815 16,815 --------------------------------------------Cash and cash equivalentsat end of period 10,662 10,250 17,655 -------------------------------------------- STATEMENT OF RECOGNISED INCOME AND EXPENDITURE Share Share Retained Capital Premium Earnings Total £'000 £'000 £'000 £'000 ---------------------------------------------At 29 January 2005 4,603 8,028 35,229 47,860 Shares issued 49 288 337Proceeds from QUEST 90 90Employee share based payments 125 125Profit after taxation 4,249 4,249Dividends (1,373) (1,373) ---------------------------------------------At 28 January 2006 4,652 8,316 38,320 51,288 Shares issued 4 16 20Proceeds for share issues previously reported as from QUEST 22 68 (90) -Employee share based payments 87 87Profit after taxation 564 564Dividends (1,209) (1,209) ----------------------------------------------At 29 July 2006 4,678 8,400 37,672 50,750 ---------------------------------------------- NOTES TO THE INTERIM RESULTS FOR THE SIX MONTHS TO 29 JULY 2006 1. Basis of preparation These condensed consolidated interim financial statements have been prepared onthe basis of the recognition and measurement requirements of IFRSs for interimfinancial statements. The condensed consolidated interim financial statements donot include all of the information required for full financial statements. The comparative figures for the 52 weeks ended 28 January 2006 are the Company'sstatutory accounts for that financial year. Those accounts have been reported onby the Company's auditors and delivered to the Registrar of Companies. Thatreport of the auditors was unqualified and did not contain statements undersection 237(2) or (3) of the Companies Act 1985. The interim information for the 26 weeks ended 29 July 2006 and 30 July 2005 hasnot been audited or reviewed by the auditors. The preparation of financial information in conformity with IFRSs requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets and liabilities, incomeand expenses. The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to be reasonable underthe circumstances, the results of which form the basis of making the judgementsabout carrying values of assets and liabilities that are not readily apparentfrom other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting policies are recognised in the period in which theestimate is revised if the revision affects only that period, or in the periodof revision and future periods if the revision affects both current and futureperiods. 2. Significant accounting policies Accounting policies adopted have been applied consistently and are consistentwith those set out in the accounts for the year ended 28 January 2006. 3. Property transactions Shops selling and marketing costs include £443,000 of gains on disposal ofnon-current assets during the period (2005: £86,000). In addition, the Companyreceived an interim payment of £1,626,000 for the compulsory relocation of theCompany's distribution centre. After matching a portion of the £1,626,000against directly attributable costs incurred in the relocation and recognised inthe income statement (so that the net impact on the profit for the period isnil), £1,071,000 is allocated to the property, plant and equipment additions forthe new distribution centre. 4. Seasonality The Company's operations have historically experienced higher revenue during thesecond half of the financial year. This is primarily due to the Christmas periodand post Christmas sale. Accordingly, the results of operations for the interimperiod are not indicative of the results, which may be expected for the entirefinancial year. 5. Earnings per share Basic earnings per ordinary share are based on the weighted average of92,992,399 (July 2005: 91,572,615; January 2006: 91,894,428;) ordinary shares inissue during the period and are calculated by reference to the profitattributable to shareholders of £564,000 (July 2005: £1,178,000; January 2006:£4,249,000;). Diluted earnings per ordinary share are based upon the weightedaverage of 94,577,476 (July 2005: 94,215,981; January 2006: 93,555,869;)ordinary shares, which takes into account share options outstanding and arecalculated by reference to the profit attributable to shareholders as statedabove. 6. Dividends The following dividends were paid in the period: --------------------------------------------- 6 months to 6 months to Year to 28 29 July 2006 30 July 2005 January 2006 £'000 £'000 £'000 ---------------------------------------------Final dividend 1.30 pence per share(2005: 1.00 pence per share) 1,209 920 920Interim dividend 0.50 penceper share - - 460Write back of waived dividends on shares held by Quest - (5) (7) --------------------------------------------- 1,209 915 1,373 --------------------------------------------- The Directors have declared a dividend of 0.50 pence per share, totalling£468,000, payable on 22 November 2006. 7. Interim Report This interim report is available on application from the Company Secretary, MossBros Group Plc, 8 St Johns Hill London SW11 1SA. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MOSB.L