Moss Bros issues profit warning as formalwear events are cancelled
Moss Bros has updated the market about the potential impact of the coronavirus on its business and times are tough, despite its ultimate confidence about the long-term situation.
The company, which is still a listed business for now until its recently-announced acquisition by Brigadier goes through, said it’s been monitoring the situation. It's been looking at its High Street, Factory Outlets, Online and Hire business segments for signs of any financial impact arising from the pandemic and has certainly seen big signs in the past week.
It said that while “the initial impact was relatively benign, over the last week we have seen a significant reduction in footfall across our retail outlets and in orders in our Hire business. As such, the group has taken the decision to temporarily close all its stores until further notice. The group recognises that Covid-19 could result in a sharper decline in trading performance if mass gatherings (such as Ascot) are voluntarily cancelled or prohibited”.
The company’s suit hire business may be a much smaller part of its overall operation these days than its retail offer, but with big events such as the aforementioned Ascot, as well as weddings and other gatherings being cancelled, that retail business will be hit too. It's also likely that fewer men will be buying suits for work in the foreseeable future if they're able to work from home.
As a result, it expects that the coronavirus will result in "a significant reduction in revenue and profitability" for the year ending January 30. But it's too early to say just how how big that reduction will be. The company is debt-free, has cash in the bank and said it's managing the business to protect profitability and taking all the actions it can to conserve that cash. It therefore thinks it has the ability to withstand significant revenue declines in the months ahead.
“Over the longer term, the board remains confident in the strategy and believes the group is well positioned to benefit from the normalisation and growth of the UK retail market,” it said.
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