Moss Bros, one of the largest suit hire companies in the country, has this week reported another profit warning. This follows a notification issued in December, declaring a ‘very touch’ month for the brand.
Expected to have seen an improvement in profits as a result of a substantial January sales push, it appears the brand has hit a rather rocky patch.
Claiming their profits to be ‘materially lower’ than investors would have expected, Moss Bros are not pinning these tough times on one particular area. According to a spokesperson, stock shortages, low footfall and a decline in suit hire demand are all contributing factors.
News rippled through the market as the brand decreased its dividend pay-outs by 32% to just 4p. Completely out of sync with market expectations, shares in Moss Bros have inevitably crashed. According to analysts, shares in the company dropped a substantial 28% after the London Stock Exchange opened.
However, this provision was to protect the brand’s future, seeing Moss Bros’ Chief Executive, Brian Brick, say he wanted to preserve the company’s “underlying strength”, expecting a “very challenging” year.
“The beginning of the year has been hampered by short-term stock delivery issues caused by the consolidation of our supplier base.
“The resulting stock shortage has undoubtedly driven a significant shortfall in sales, which will continue until late spring.
“Although this has been a painful experience, I am confident that the availability issues are well on track to being resolved and the margin benefits from the consolidation will flow through.
“This stock shortage has led to a disappointing start to the year and, whilst we are still at a very early stage of our new financial year, the more cautious consumer environment and the effect of short-term weather impacts has led to a readjustment of our profit expectations to protect the group’s longer-term investments.”
Whilst the brand is facing financial difficulties, it appears they are not the only ones. Various reports show that Carpetright and Mothercare both find themselves in similar situations.
Let us know what you think, are Moss Bros’ 129 UK stores destined for more setbacks?