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MOSB Moss Bros Group Plc

21.60
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Moss Bros Group Plc LSE:MOSB London Ordinary Share GB0006056104 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 21.60 21.80 22.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Moss Bros Group PLC Preliminary Results (9803I)

27/03/2018 7:00am

UK Regulatory


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RNS Number : 9803I

Moss Bros Group PLC

27 March 2018

For Immediate Release 27 March 2018

Unaudited preliminary results for the 52 weeks ended 27 January 2018

Moss Bros Group PLC ("the Group"), the 'first choice for men's tailoring', today announces its Preliminary Results, covering the period from 29 January 2017 to 27 January 2018.

Financial Highlights

   --      Total Group revenue, excluding VAT, was up 3.0% on the previous year to GBP131.8m. 
   --      Group like-for-like* sales of GBP137.3m, including VAT, up 1.6% (2016/17: up 5.3%): 
   -     Like-for-like* retail sales including e-commerce up 2.9% (2016/17: up 6.0%) 
   -     Like-for-like* hire sales down -6.2% (2016/17: up 1.5%) 

-- E-commerce sales including VAT up 13.5% (2016/17: up 15.7%) now 12% of total sales (2016/17 11%)

   -       Mobile and tablet sales growth strong and now 48% of total e-commerce sales 
   --      Profit before tax delivered of GBP6.7m, -6.1% lower than prior year (2016/17: GBP7.1m). 

-- EBITDA** of GBP13.3m (2016/17: EBITDA** GBP13.6m), driven by increasing sales, continued tight control of costs but affected by the impact of significant cost headwinds.

   --      Gross margin -1.5% lower at 59.8%, due largely to the impact of the weaker pound 

-- Ongoing strong cash position of GBP17.5m (28 January 2017: GBP19.5m) through close management of working capital and after a further GBP8.5m capital investment across the business.

   --      Cash generated from operating activities of GBP12.6m (2016/17: GBP16.0m). 
   --      Basic earnings per share of 5.33 pence, down 3.3% (2016/17: 5.51 pence). 

-- Final dividend proposed of 1.97 pence, total dividend for the year 4.00 pence (2016/17: total dividend 5.89 pence), The cut reflects a prudent approach to capital management, modifying the existing dividend policy to ensure we are able to fully cover our future dividends with profits in FY20/21 and onwards. The business continues to be cash generative.

Operational Commentary

   --      A tough end to the year, with poor December footfall. 

-- Benefits from ongoing investment in product and development of sub-brands such as Moss London, both at home and on international marketplace sites.

-- E-commerce sales made good progress. The Group is starting to personalise the interactions that we have with our customers, which delivers more targeted campaigns.

   --      'Tailor Me' custom tailoring service increasing in volume and value. 
   --      Store refits and new store openings continue to improve the quality of our store estate. 

Current trading

-- Trading performance has suffered significantly from the stock shortages caused by the consolidation of key suppliers, as articulated in the 21 March 2018 trading statement, when we updated the market on expectations for the coming year. We anticipate that these issues will be resolved by late Spring 2018

-- Retail like-for-like* sales including e-commerce, including VAT, in the first 8 weeks of the new financial year are down -6.7%. Although this shows a slight improvement of the trend we reported in January, it is clear that the recovery we anticipated has been significantly hampered by the stock shortages.

-- E-commerce sales, including VAT, in the first 8 weeks of the year are up 4.0%, also substantially impacted by availability.

-- Hire like-for-like*, reported on a 'cash taken' basis, was -4.9% in the first 8 weeks of the year. Hire sales continue to be challenging, although Hire peak season is still to come.

-- Early responses to the Spring/Summer 2018 ranges across Retail have been positive and as stock has now started to build we are seeing better sell through rates come through.

Commenting on the results and outlook, Brian Brick, Chief Executive Officer, said:

"It is frustrating that after a strong first half performance, which continued into the third quarter of the year, the final quarter's performance was below the level we had forecast.

We suffered from a significant stock shortage, due to the poor implementation of the project to consolidate suppliers. We left ourselves with too little 'running line' stock to close out the year having bought cautiously for the second half of 2017. This has continued to hamper our performance into the start of the year.

In spite of this issue, we have continued to progress the modernisation of the store portfolio, which is nearing completion and develop our omni-channel shopping proposition, including a better level of customer segmentation.

Going forward, we are planning for an extremely challenging retail environment, not least because of the uncertain consumer environment and significant cost headwinds. However, there is no question that we have hampered our own position through the stock shortages and as this gets back on track, our strong consumer proposition is restoring momentum. We will ensure that we continue to invest in this proposition to protect our position.

The early response to the 2018 Spring/Summer retail range has been positive although our lack of stock has been challenging and as a result, retail like-for-like* sales are below the same period last year.

We have very recently updated the market on expectations for the coming year."

*Like-for-like (including VAT) represents financial information for e-commerce and stores open during both the current and prior financial periods and compares 52 weeks against 52 weeks, except for stores refitted in the period, where the period closed for refit is excluded from both the current and prior financial periods. Like-for-like Hire and Tailor Me sales are calculated on cash receipts in the period, before adjustment for the movement in the level of deposits held.

**EBITDA is earnings before interest, tax, depreciation and amortisation.

For further information please contact:

Moss Bros Group Plc: 0207 447 7200

Brian Brick, Chief Executive Officer

Tony Bennett, Finance Director

Buchanan: 0207 466 5000

Charles Ryland/Victoria Hayns/Catriona Flint

CHAIRMAN'S STATEMENT

The combination of the poor implementation of the consolidation of suppliers, significant external cost headwinds and a more fragile consumer market, has abruptly and painfully disrupted a strong track record of growth. This was very disappointing, as it overshadows underlying progress in the strength of our product and the growth of our new brands such as Moss London and our new proposition Tailor Me. Strong trading for the first three quarters of the year enabled us to grow overall retail sales by 4.4% but due to lower footfall than anticipated during December, particularly in stores, the business reported a reduction in its full year profit before tax performance of -6.1%, to GBP6.7m, compared with GBP7.1m in the previous year. EBITDA** reduced to GBP13.3m, compared with GBP13.6m in the previous year.

Total like-for-like* sales including VAT reflected an overall increase of 1.6% on the prior year. Like-for like retail sales, including e-commerce, were 2.9% up on the previous year.

Throughout the year, we remained focused on our multi-branded and segmented pricing architecture. We continued to modernise our offer and up to the impact of our stock shortages, we continued to gain share in the suit market. The Group also faced previously highlighted external cost pressures in 2017, including increases in the National Living Wage, pension auto-enrolment, the National Minimum Wage, the Apprenticeship Levy, the revaluation of business rates, higher energy taxes and increased purchasing costs due to the combined effects of a devalued pound and commodity inflation. We took early action in the year to manage our cost base, but the impact of a significant slowdown in footfall, especially in December, and the start of our stock problems, created a shortfall to our expected profits.

In spite of these challenges, we have continued to invest in the business to ensure that we remain both relevant and appealing to our customers. The core Moss Bros master brand did grow its share, as did each of our supporting sub-brands of Moss London, Moss 1851, and Moss Esq, with Moss London expanding our reach to a younger customer. Actions to develop our product offer have included the growth of 'Tailor Me', which is gaining significant traction as a more accessible form of bespoking, allowing a significant proportion of our suit range to be personalised. This unique proposition is now available across our entire estate and we have grown sales of Tailor Me by 116% in the last 12 months.

We opened a further five new stores this year in Dundrum, Gateshead Metrocentre, Rushden Lakes, Lincoln, and Bexleyheath. A further three stores have been relocated in Bicester, Cardiff, and Bracknell and we closed four marginal stores. The total estate is now 128 outlets, compared with 127 stores last year. We have a low average lease length of 55 months and are targeting significantly improved lease terms on renewal.

We completed seven store refits, which means almost all of our store estate has now been modernised over the last six years. 108 new and refitted stores currently trade in the new format. This increased investment has impacted cash in the short term and we turn our attention now to maintaining and refining our estate to reflect the more premium positioning of our brands amongst our target customers.

We added to our management team with the recruitment of a new Buying Director, Nick Reed, who joined us from Charles Tyrwhitt in April 2017. He has enhanced our product credentials, specifically in the area of shirts and accessories. We have also proactively managed Board succession throughout the year. Bryan Portman announced his decision to step down from the Board as a Non-Executive Director and Chairman of the Audit Committee at the AGM in May 2018. Alex Gersh joined as a Non-Executive Director in November 2017. Alex is, until Summer 2018, the CFO of FTSE 100 listed business Paddy Power Betfair Group, having been appointed as CFO of Betfair Group plc ("Betfair") in 2012. As well as his strong listed finance experience, he brings broad strategic, commercial and digital skills, along with International consumer insight. Alex will become Chairman of the Audit Committee in May 2018, when Bryan steps down.

Although we expect the trading environment for the business in the first half of 2018 to remain challenging, we anticipate that our stock shortage will be resolved by late spring and are confident that momentum will improve as our product, service and cost initiatives take effect. The team continues to apply strong cash and working capital controls and the business continues to be debt free, with a healthy cash balance.

The Board has taken the prudent step of cutting the dividend, proposing the payment of a final dividend of 1.97 pence per share to be paid on 22 June 2018 to all shareholders on the register on 11 May 2018 (ex-dividend date 10 May 2018). The total dividend for the year is 4.00 pence per share, a decrease of 32% on the previous year. We have changed our Dividend Policy to allow the business to fully cover future dividends by FY20/21 and onwards. The business continues to be cash generative.

In the coming year, we will continue to grow the share of 'Tailor Me', accelerate the reinvention of our Hire offer, which is planned to be a much lower percentage of our sales going forward and increase our investment in our e-commerce offer, whilst investing more in our brands, colleague and service proposition. We are confident that we are well placed to leverage our specialist credentials.

Finally, I would like to recognise the fact that we differentiate ourselves through the highest levels of customer service, which is the result of the hard work of all of our people. I would like to thank them all for their contribution to the Group and continued commitment in a difficult year. We are very appreciative.

DEBBIE HEWITT

CHAIRMAN

27 March 2018

* Like-for-like (including VAT) represents financial information for e-commerce and stores open during both the current and prior financial periods and compares 52 weeks against 52 weeks, except for stores refitted in the period, where the period closed for refit is excluded from both the current and prior financial periods. Like-for-like Hire and Tailor Me sales are calculated on cash receipts in the period, before adjustment for the movement in the level of deposits held.

**EBITDA is earnings before interest, tax, depreciation and amortisation.

CHIEF EXECUTIVE'S REVIEW

REVIEW OF OPERATIONS

The Group had a disappointing end to the year which was a combination of self-inflicted stock problems and a fragile consumer environment. In spite of this, we made progress throughout the year, building brand equity, alongside significant improvements in our multi-channel proposition, leaving us well placed to capitalise on the tailoring expertise which we possess in-store and online. The ongoing store refit programme in 2017/18 means that 108 of our 128 stores were trading in the new format at the year end. Our 'Tailor Me' personalisation service continues to develop, adding further to our proposition, making us the ideal destination whether a customer wishes to buy, rent or tailor their perfect suit.

RETAIL

We continued to pursue operational improvements across the business, which when combined with our ongoing investment in store refits during the year, benefited store only like-for-like* sales, which were up 1.2% on the previous year (2016/17: up 4.5%). Retail gross margins fell on the previous year by -1.0% as a result of the impact of the weaker pound. To address the impact of weaker sterling, we undertook a project in the second half to consolidate our suppliers. Poor implementation led to stock shortages, which had a significant effect in the last few weeks of the year and have continued to do so into the first quarter of this year. We have a robust action plan in place to remedy these shortfalls and expect this to be fully resolved late Spring 2018.

We opened 5 new stores, and closed 4 in the UK during the year. A further 3 stores were relocated into better locations. We continue to review new store and relocation opportunities in the UK and have 1 confirmed opening for 2018. The Group now trades from 128 stores (28 January 2017: 127 stores).

The inherent flexibility in our property estate gives us options in what we anticipate will be a fast changing retail landscape. The average lease length across the store portfolio is only 55 months and we are targeting improved lease terms on renewal, of a 10 year term, with a tenant only break clause at year 5. The underpinning of our retail and hire business and the demand for e-commerce 'click & collect' and 'click & return' points, together with advantageous lease deals, means there is an opportunity to reposition our store footprint on a selective and cost effective basis, with good returns.

HIRE

Overall like-for-like* hire sales fell by -6.2% in the year (2016/17: up 1.5%). The broadening of the range to include lounge suits has been successful and receives positive customer feedback, although it has not compensated for the fall seen in traditional morning wear hire. We will continue to invest in relevant new Hire product lines and to make improvements to streamline our processes and system. Our online Hire offer is seeing strong adoption of the new 'My Outfit' functionality, allowing the start of a hire journey online and completion in store.

We are confident our position as the leading hire brand will be maintained through the product and technology initiatives currently underway. Although a declining morning wear market, we do continue to take share.

E-COMMERCE

Sales grew strongly, up 13.5% on the previous year. Online sales now represent 12% of total sales (2016/17: 11%). Visitor conversion shows good growth across all electronic devices and particularly so from customers reaching us via mobile devices, since the introduction of a fully device responsive website in the second half of 2016.

The percentage of mobile and tablet sales growth was especially strong and now comprises 48% of total e-commerce sales.

During the year, we invested in developing a detailed understanding of our customer segments and how each of those segments interacts with us. This will enable us to ensure that any communication which we do have with our customers is both timely and relevant. It will also allow us to better personalise their experience on the www.moss.co.uk website. We continue to actively acquire new customers and also focus attention on building on our existing customer repurchase behaviour.

SUPPLY CHAIN AND COSTS

We regularly review each of our supply routes and develop partnerships with suppliers who have the capability to deliver the blend of quality and value which we require. We are always careful to ensure that we do not sacrifice quality purely to obtain lower cost garments.

The majority of our product lines are either purchased directly in US Dollars or the cost of production is US Dollar based.

The second half of 2017 saw the impact on margin of the fall in the value of sterling as our foreign exchange hedging contracts placed 'pre-Brexit vote' expired. We worked hard with our suppliers to mitigate as much of the rapidly rising cost prices as we could, however, there was an impact on gross margin rates in the second half of the year as a result of the weaker pound.

We took a decision to consolidate our supply base, which in the long term is the right decision but very poor execution has led to significant stock shortages. Albeit a painful experience, we are confident we have selected the right partners and believe the stock shortages will be resolved by late Spring 2018.

In addition to the increased cost prices, economic uncertainty in the UK and weaker consumer confidence more generally meant that we planned our stock buy for the Autumn/Winter 2017 season cautiously. With hindsight, we planned the buy too cautiously and as such exited the Autumn/Winter season with too little stock. Whilst it is positive that we exited the season without any excess stock issues, we consider that the stock shortfall impacted sales during the final quarter of the year.

Underlying store and central costs rose more slowly than turnover, but this was largely driven by 'one-off' cost reductions, versus the prior year, which will not repeat in 2018/19.

INFRASTRUCTURE

We successfully upgraded our technology infrastructure during 2017 delivering a robust and scalable platform, upon which our core business systems will operate. The ultimate benefit of this work is improved business efficiency and a better customer experience.

PEOPLE

Investment in people continues to establish a stronger service culture within the business and to support our aim to become the 'first choice for men's tailoring'. Progress has been made in building a strong training portfolio, robust recruitment and performance management and a reward and recognition framework which underpins the Moss Bros. Way.

FINANCIAL REVIEW

Top line sales growth continued in 2017/18 with overall like-for-like* sales growth despite the challenging end to the year. Costs continued to be tightly controlled whilst ensuring that investment continued in those areas required to ensure that we continue to make progress on our strategic goals. Profit before taxation on continuing operations was GBP6.7m, compared with a profit of GBP7.1m in the previous year.

REVENUE

Overall revenue was up 3.0% (up 1.6% like-for-like*) on the previous year to GBP131.8m. Retail including e-commerce was up 4.4% (up 2.9% like-for-like*) on the previous year. Hire was 6.0% lower (down 6.2% like-for-like) on the previous year.

GROSS MARGIN

Underlying overall gross margin fell by 1.5% in the year (59.8% vs 61.3%), due to a combination of the impact of rising input prices as a result of the weaker pound and the reduction of Hire sales within our sales mix.

COSTS

Administrative and shops' selling and marketing costs increased by 1.2% on the prior year. We benefitted from a number of non-recurring year-on-year cost reductions within Administrative expenses. Costs remain tightly controlled with expenditure focused on areas that will add value and support the development of the strategic goals of the Group.

EARNINGS PER SHARE

Basic earnings per share on total earnings were 5.33 pence compared with 5.51 pence per share last year. Diluted earnings per share, on total earnings, were 5.31 pence per share compared with 5.39 pence per share last year.

TAXATION

The Group's effective tax rate for 2017/18 was 20.3% compared with 22.7% for 2016/17. The reduction in 2017/18 is mainly due to a combination of a reduction in prevailing tax rates and timing differences between depreciation charged and capital allowances.

DIVID

As previously announced, the Board has reviewed its Dividend Policy. The Group has a strong balance sheet but, given the more challenging trading environment, the Board is taking a prudent approach to capital management and has decided to reduce the dividend to ensure that we are able to fully cover our future dividends with profits in FY20/21 and onwards. The Board proposes the payment of a final dividend of 1.97 pence per share (2016/17: 3.98 pence) bringing the total for the year to 4.00 pence per share, compared with 5.89 pence per share for the year ended 28 January 2017. The final dividend is to be paid on 22 June 2018 to all shareholders on the register as at 11 May 2018 (ex-dividend date 10 May 2018).

INVESTMENT

Total capital expenditure in the year was GBP8.5m (2016/17: GBP8.8m) and depreciation and amortisation was GBP6.6m (2016/17: GBP6.5m). This included the opening of 5 new stores, 3 store relocations and the refurbishment of 7 stores. The total capital expenditure included further investment in new Moss Bros hire inventory of GBP1.8m (2016/17: GBP1.9m), whilst depreciation on hire inventory was GBP1.6m (2016/17: GBP1.6m).

CASH AND LIQUIDITY

The year end cash balance was GBP17.5m compared with GBP19.5m last year, after investment in new stores, store refits, technology and hire stock, and payment of dividends.

INVENTORY

The mix and volume of inventory in the business was reviewed during the year to ensure sufficient inventory was available to support sales across the business. As noted previously our closing stock levels were too low as we exited the Autumn/Winter 2017 season and this shortfall will be rectified for 2018. Stock at the year-end was GBP15.4m (2016/17: GBP16.7m).

TRADE AND OTHER PAYABLES

The terms and conditions with our suppliers are regularly reviewed and adjusted in order to maximise the average cash balance, whilst improving the product gross margin.

FUTURE DEVELOPMENTS

The Board continues to believe Moss Bros has a compelling proposition, with the growth of e-commerce underpinning the move to full omni-channel retailing. The development of our sub-brands during the year, particularly Moss London, has been good and we will continue to invest in product innovation both in suiting and adjacent categories such as shirts.

In order to maximise our opportunity and with the increasing role that digital has to play in marketing, we will add further resource and investment during 2018 to support our omni-channel proposition and to better serve our customer with a more personalised experience on site and in store.

The growing adoption of our Tailor Me offer further underpins our credentials as the number one men's formalwear specialist in the UK. The service will expand in 2018 to include guest brands alongside Moss own-brand fabrics.

Our ongoing investment in our People Strategy continues to establish a multi-skilled service culture across the business - our people are critically important to our service proposition.

RETAIL

The store refit programme is now entering its seventh year with the majority of stores complete. We have 108 new or refitted stores trading in the new store format. We plan to begin re-visiting some stores to test a cosmetic update to the original design to ensure that our stores remain attractive and relevant for our customers. Given the strength of our combined retail and hire offer we continue to seek expansion opportunities both through new outlets and relocations where commercially viable.

HIRE

We will continue to leverage the opportunities to grow our market share through all distribution channels including online. Investment in new product areas since 2016, such as lounge suits, has proved very successful and has provided an offset to the declining morning wear hire market. Investment in new hire stock totalled GBP1.8m in 2017 and is planned at a further GBP1.6m in 2018.

Early season booking numbers for collection in the current year (FY 2018/19) are -10.8% below last year's bookings at this point. The end-to-end customer journey within Hire can happen over an extended period of time and as a result we will continue to invest in people, systems and processes and training to ensure that each stage of that journey is consistently delivered on promise.

E-COMMERCE

We plan to continue to leverage further growth opportunities both in the UK and overseas by strengthening our e-commerce capability and building on our growth. We will invest more in new customer recruitment, lapsed customer reactivation and in segmentation/personalisation of our communication with our customers.

SUPPLY CHAIN & COSTS

Our supply chain continues to be of significant importance in delivering high quality and relevant product and service and in realising efficiencies.

In the year ahead, we will continue to see higher input costs; in product from a weaker pound, national living wage, apprenticeship levy and increases in levels of pension auto-enrolment costs. We will therefore continue to operate the company in a manner appropriate for the more competitive trading environment and we will continue to seek further ways in which to mitigate these rising costs whilst protecting the investment we are making in building and sustaining our differentiated offer.

We anticipate central costs will increase broadly in line with turnover in 2018/19 as we maintain our investment in our omni-channel capability, our people and our infrastructure.

Capital expenditure for 2018/19 is estimated at GBP7.4m, including GBP2.0m for investment in new and refitted stores, GBP1.5m in Technology, GBP1.0m in infrastructure and GBP1.6m for hire stock.

INFRASTRUCTURE

We will invest further in our warehouse capacity during the 2018/19 year.

PEOPLE

During 2017 we have continued to develop our key people initiatives creating more depth of content to the Moss Bros Academy, introducing digital learning, setting up 4 Centres of Excellence and launching the Moss Bros Diploma in response to the Apprenticeship opportunities. 2017 has been a year of embedding the initiatives introduced in 2016 in particular developing people management capability, introducing a Sales though Service programme and Hire upskill programme to all employees.

2017 has seen a full year of The Amazing Club; recognising and celebrating talent around the business: of The Hub; improving communications through a number of channels and a second year of employee engagement which has provided actionable data to further drive engagement and productivity.

OUTLOOK

The Group had a very disappointing start to the year caused by a combination of self-inflicted stock problems and a more fragile consumer environment. We have very recently updated the market on expectations for the coming year, in our Trading Update of the 21(st) March 2018.

We are confident that the stock problems will be resolved by late Spring and that we will re-establish momentum.

The investments we are making to reposition our proposition should add to that momentum. Our omni-channel proposition continues to improve and we are focused on gaining better insight into our customer base as a result.

Despite these issues, it is important that we continue to increase our investment in key areas of future growth, most notably our E-commerce business, our product development, the customer experience and our Tailor Me proposition. Our offer is strong, we continue to achieve traction from our investments in the business and we are confident that the business will return to strong growth.

Our stores continue to be important in enabling customers to experience the full range of services which we offer, whilst our store teams provide help and advice alongside a passion for style, expertise and enthusiasm. Our people strategy remains an important part of our future development delivering improvements in our customer experience, leading to improved customer satisfaction and retention.

We expect macro conditions to continue to challenge us throughout 2018, however we take confidence from early reaction to the new Spring/Summer 2018 ranges.

We see the weaker trading environment as an opportunity to strengthen our core proposition compared to the competition and to utilise our strong balance sheet to invest.

BRIAN BRICK

CHIEF EXECUTIVE OFFICER

27 March 2018

*Like-for-like (including VAT) represents financial information for e-commerce and stores open during both the current and prior financial periods and compares 52 weeks against 52 weeks, except for stores refitted in the period, where the period closed for refit is excluded from both the current and prior financial periods. Like-for-like Hire and Tailor Me sales are calculated on cash receipts in the period, before adjustment for the movement in the level of deposits held.

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

FOR THE 52 WEEKSED 27 JANUARY 2018

 
                                           52 weeks 
                                      to 27 January                        52 weeks to 28 
                                               2018                          January 2017 
----------------------------------   --------------  ------------------------------------ 
                                              Total                                 Total 
                                            GBP'000                               GBP'000 
----------------------------------   --------------  ------------------------------------ 
CONTINUING OPERATIONS 
Revenue                                     131,774                               127,930 
 
Cost of sales                              (52,948)                              (49,528) 
-----------------------------------  --------------  ------------------------------------ 
Gross profit                                 78,826                                78,402 
 
Administrative expenses                     (5,937)                               (6,620) 
Shops' selling and marketing 
 costs                                     (66,234)                              (64,705) 
-----------------------------------  --------------  ------------------------------------ 
Operating profit                              6,655                                 7,077 
 
Other gains and losses                           21                                    26 
Investment revenues                              37                                    48 
Finance costs                                     -                                   (5) 
Profit on ordinary activities 
 before taxation                              6,713                                 7,146 
 
Tax charge                                  (1,362)                               (1,623) 
-----------------------------------  --------------  ------------------------------------ 
Profit after taxation 
 attributable to equity 
 holders of the parent                        5,351                                 5,523 
===================================  ==============  ==================================== 
 
OTHER COMPREHENSIVE INCOME 
 - ITEMS THAT MAY BE RECLASSIFIED 
 SUBSEQUENTLY INTO PROFIT 
 OR LOSS 
 Cash flow hedges 
 Change in fair value 
 of effective portion                       (1,853)                                 (212) 
-----------------------------------  --------------  ------------------------------------ 
Other comprehensive income 
 for the 
 Year, net of tax                           (1,853)                                 (212) 
-----------------------------------  --------------  ------------------------------------ 
Total comprehensive income 
 for the year, net of 
 tax                                          3,498                                 5,311 
===================================  ==============  ==================================== 
 
Earnings per share (pence) 
Basic - total                                 5.33p                                 5.51p 
Diluted - total                               5.31p                                 5.39p 
===================================  ==============  ==================================== 
 
 
 

CONSOLIDATED STATEMENT

OF CHANGES IN EQUITY

FOR THE 52 WEEKSED 27 JANUARY 2018

 
                                           Share               Employee 
                                 Share   premium  Share-based   benefit   Hedging   Retained     Total 
52 WEEKSED 28              capital   account     payments     trust   Reserve   earnings    equity 
 JANUARY 2017                  GBP'000   GBP'000      GBP'000   GBP'000   GBP'000    GBP'000   GBP'000 
----------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
BALANCE AT 30 JANUARY 
 2016                            5,040     8,673          775     (682)       630     22,901    37,337 
Profit for the period                -         -            -         -         -      5,523     5,523 
Other comprehensive 
 income: 
Cash flow hedging 
 movement                            -         -            -         -     (212)          -     (212) 
----------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Total comprehensive 
 income for the period               -         -            -         -     (212)      5,523     5,311 
----------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Dividends paid                       -         -            -         -         -    (5,687)   (5,687) 
Credit to equity for 
 equity settled share-based 
 payments                            -         -          392         -         -          -       392 
Exercise of shares 
 held under option                   -         -        (480)         -         -        480         - 
Movement on deferred 
 tax on equity settled 
 share-based payments                -         -         (50)         -         -          -      (50) 
Movement on current 
 tax on exercise of 
 equity settled share 
 based payments                      -         -            -         -         -        113       113 
Sale of shares by 
 employee benefit trust              -         -            -       544         -      (544)         - 
SAYE exercise - employee 
 contributions                       -         -            -         -         -         83        83 
 
BALANCE AT 28 JANUARY 
 2017                            5,040     8,673          637     (138)       418   22,869      37,499 
----------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
 
 
                                           Share               Employee 
                                 Share   premium  Share-based   benefit   Hedging   Retained     Total 
52 WEEKSED 27              capital   account     payments     trust   Reserve   earnings    equity 
 JANUARY 2018                  GBP'000   GBP'000      GBP'000   GBP'000   GBP'000    GBP'000   GBP'000 
----------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
BALANCE AT 29 JANUARY 
 2017                            5,040     8,673          637     (138)       418     22,869    37,499 
Profit for the period                -         -            -         -         -      5,351     5,351 
Other comprehensive 
 income: 
Cash flow hedging 
 movement                            -         -            -         -   (1,853)          -   (1,853) 
----------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Total comprehensive 
 income for the period               -         -            -         -   (1,853)      5,351     3,498 
----------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
Dividends paid                       -         -            -         -         -    (6,040)   (6,040) 
Debit to equity for 
 equity settled share-based 
 payments                            -         -         (72)         -         -          -      (72) 
Exercise of shares 
 held under option                   -         -        (382)         -         -        382         - 
Movement on deferred 
 tax on equity settled 
 share-based payments                -         -          (6)         -         -          -       (6) 
Movement on current 
 tax on exercise of 
 equity settled share 
 based payments                      -         -            -         -         -          8         8 
Sale of shares by 
 employee benefit trust              -         -            -       286         -      (286)         - 
Subscription to employee 
 benefit trust                       -         -            -     (466)         -          -     (466) 
SAYE exercise - employee                                    -                   - 
 contributions                       -         -                      -                    -         - 
 
BALANCE AT 27 JANUARY 
 2018                            5,040     8,673          177     (318)   (1,435)   22,284      34,421 
----------------------------  --------  --------  -----------  --------  --------  ---------  -------- 
 

CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

AS AT 27 JANUARY 2018

 
                                         27 January  28 January 
                                               2018        2017 
                                            GBP'000     GBP'000 
--------------------------------------   ----------  ---------- 
ASSETS 
 Intangible assets                            2,177       1,443 
Property, plant and equipment                19,354      18,792 
Leasehold improvements                        1,336       1,252 
Deferred tax assets                           1,277       1,200 
---------------------------------------  ----------  ---------- 
TOTAL NON-CURRENT ASSETS                     24,144      22,687 
---------------------------------------  ----------  ---------- 
Inventories                                  15,393      16,709 
Trade and other receivables                   4,594       3,688 
Cash and cash equivalents                    17,477      19,518 
Derivative financial instruments                  -         411 
TOTAL CURRENT ASSETS                         37,464      40,326 
---------------------------------------  ----------  ---------- 
TOTAL ASSETS                                 61,608      63,013 
---------------------------------------  ----------  ---------- 
LIABILITIES 
 Trade and other payables                    18,383      17,157 
Derivative financial instruments              1,421           - 
Provisions                                    1,205       1,252 
Current tax liability                           767       1,181 
---------------------------------------  ----------  ---------- 
TOTAL CURRENT LIABILITIES                    21,776      19,590 
---------------------------------------  ----------  ---------- 
Other payables                                3,481       3,208 
Provisions                                      908       1,321 
Deferred tax liabilities                      1,022       1,395 
---------------------------------------  ----------  ---------- 
TOTAL NON-CURRENT LIABILITIES                 5,411       5,924 
---------------------------------------  ----------  ---------- 
TOTAL LIABILITIES                            27,187      25,514 
---------------------------------------  ----------  ---------- 
NET ASSETS                                   34,421      37,499 
---------------------------------------  ----------  ---------- 
EQUITY 
 Called up share capital                      5,040       5,040 
Share premium account                         8,673       8,673 
Share-based payments                            177         637 
Employee benefit trust                        (318)       (138) 
Hedge reserve                               (1,435)         418 
Retained earnings                            22,284      22,869 
---------------------------------------  ----------  ---------- 
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS 
 OF PARENT                                   34,421      37,499 
---------------------------------------  ----------  ---------- 
 

GROUP & COMPANY CONSOLIDATED CASH FLOW STATEMENT

FOR THE 52 WEEKSED 27 JANUARY 2018

 
                                                              52 weeks     52 weeks 
                                                                    to           to 
                                                            27 January   28 January 
                                                                  2018         2017 
                                                               GBP'000      GBP'000 
--------------------------------------------------------   -----------  ----------- 
OPERATING ACTIVITIES 
 Profit after taxation                                           5,351        5,523 
Adjustments for: 
 Taxation charge                                                 1,362        1,623 
Other gains                                                       (21)         (26) 
Investment revenues                                               (37)         (48) 
Financial costs                                                      -            5 
Amortisation of intangible assets                                  862          801 
Impairment of tangible fixed assets                                148            - 
Depreciation of tangible fixed assets                            5,720        5,905 
Amortisation of compulsory purchase compensation 
 receipt                                                             -        (203) 
Loss on sale of property, plant and equipment                      348          636 
Decrease / (Increase) in inventories                             1,316      (2,281) 
Increase in receivables                                          (906)        (675) 
Increase in payables                                             1,612        5,718 
(Decrease) / Increase in provisions                              (461)           96 
Share-based payments (credit) / expense                           (91)          444 
Exercise of share options                                        (382)        (480) 
Taxation paid                                                  (2,222)      (1,072) 
---------------------------------------------------------  -----------  ----------- 
NET CASH INFLOWS FROM OPERATING ACTIVITIES                      12,599       15,966 
---------------------------------------------------------  -----------  ----------- 
INVESTING ACTIVITIES 
 Interest received                                                  37           48 
Interest paid                                                        -          (5) 
Purchase of intangible assets                                  (1,652)        (650) 
Purchase of tangible fixed assets                              (6,826)      (8,115) 
Proceeds from the sale of property, plant and equipment             21          138 
NET CASH USED IN INVESTING ACTIVITIES                          (8,420)      (8,584) 
---------------------------------------------------------  -----------  ----------- 
FINANCING ACTIVITIES 
Dividends paid                                                 (6,040)      (5,687) 
Proceeds of employee benefit trust share sale                      286          544 
Subscription to employee benefit trust                           (466)            - 
Excess SAYE receipt between cost and exercise price                  -           20 
---------------------------------------------------------  -----------  ----------- 
NET CASH USED IN FINANCING ACTIVITIES                          (6,220)      (5,123) 
---------------------------------------------------------  -----------  ----------- 
 
Cash and cash equivalents at beginning of period                19,518       17,259 
Net (decrease) / increase in cash and cash equivalents         (2,041)        2,259 
---------------------------------------------------------  -----------  ----------- 
Cash and cash equivalents at end of period                      17,477       19,518 
---------------------------------------------------------  -----------  ----------- 
 
   1.      Basis of preparation 

The financial information set out in the announcement does not constitute the Group's statutory accounts for the periods ended 27 January 2018 or 28 January 2017. The financial information for the period ended 28 January 2017 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditor reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498(2) or (3) of the Companies Act 2006. The audit of the statutory accounts for the 52 week period ended 27 January 2018 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), this announcement does not itself contain sufficient information to comply with IFRS. The Group expects to publish full financial statements that comply with IFRS in April 2018.

From the Group's perspective, there are no applicable differences between IFRS adopted for use in the European Union and IFRS as issued by the International Accounting Standards Board.

The accounting policies adopted by the Group for the 52 weeks ended 27 January 2018 in these consolidated preliminary results are consistent with those adopted by the Group in its consolidated financial statements for the 52 weeks ended 28 January 2017.

   2.      Going concern 

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement and the Chief Executive's Business Review. The latter describes the financial position of the Group, its cash flows, liquidity position and funding, together with the Group's objectives.

The Board of Directors has undertaken a recent thorough review of the Group's budgets and forecasts following the release of the 21 March 2018 trading update and has produced detailed cash flow projections which take account of reasonably possible changes in trading performance and potential mitigating actions. These cash flow projections show that the Group is expected to operate within the level of its current surplus cash balances.

After making enquiries, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future.

   3.      Earnings per share 

Basic earnings per ordinary share is based on the weighted average of 100,458,586 (2016/17: 100,211,983) ordinary shares in issue during the period after deducting for shares held by the Employee Benefit Trust and are calculated by reference to the profit attributable to shareholders of GBP5,351,000 (2016/17: GBP5,523,000).

Diluted earnings per ordinary share is based upon the weighted average of 100,798,679 (2016/17: 102,559,814) ordinary shares after deducting shares held by the Employee Benefit Trust, that were non-dilutive for the period.

 
 Basic earnings per share 
                                2017/18   2016/17 
                                  Pence     Pence 
--------------------------   ----------  -------- 
 Basic earnings per share          5.33      5.51 
 
 
 Diluted earnings per share 
                                  2017/18   2016/17 
                                    Pence     Pence 
----------------------------   ----------  -------- 
 Diluted earnings per share          5.31      5.39 
 
   4.     Revenue and operating segments 

Revenue

Revenue comprises sales to third parties (excluding VAT) and is derived from the retail sale and hire of clothing and ancillary goods. Revenue is recognised on exchange of goods. For Hire and Tailor Me the exchange of goods occurs when the clothing and other goods are collected for use by the customer. At this point it is deemed that all risks and rewards have been transferred. Hire and Tailor Me deposits are held within deferred revenue until this date. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes.

Operating Segments

The majority of the Company's revenue arose in the United Kingdom, with the exception of three stores in Ireland.

IFRS 8 'Operating Segments' requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive Officer to allocate resources to the segments and to assess their performance. The Chief Executive Officer is the Chief Operating Decision Maker.

Information reported to the Group's Chief Executive Officer for the purposes of resource allocation and assessment of segment performance is focused on the split between Mainstream Retail and Hire. This is consistent with the prior year.

Information regarding the Group's continuing operating segments is reported below. E-commerce is not identified separately as an operating segment due to increasing levels of cross-over between physical store sales and customers and e-commerce sales and customers as we pursue our strategic goal of achieving full omni-channel capability.

Only revenue and gross profit have been reported for the Group's business segments; Retail and Hire, as the main operating costs, being property, related overheads and staff, cannot be separately identified as they both use the same stores and hence operating profit is not reported to the Chief Executive Officer split by Retail and Hire. Revenue and gross profit are the measures reported to the Chief Executive Officer.

On the same basis, assets cannot be allocated between Retail and Hire, and are not reported to the Chief Executive Officer separately.

The following is an analysis of the Group's revenue and gross profit in the current and prior period.

 
KEY FINANCIALS 
                                        52 weeks     52 weeks 
                                              to           to 
                                      27 January   28 January 
CONTINUING OPERATIONS                       2018         2017 
                                         GBP'000      GBP'000 
-----------------------------------  -----------  ----------- 
Revenue 
 Retail                                  115,683      110,812 
Hire                                      16,091       17,118 
-----------------------------------  -----------  ----------- 
Total revenue                            131,774      127,930 
-----------------------------------  -----------  ----------- 
Gross profit 
 Retail                                   66,606       64,920 
Hire                                      12,220       13,482 
-----------------------------------  -----------  ----------- 
Total gross profit                        78,826       78,402 
-----------------------------------  -----------  ----------- 
Gross Margin % 
Retail                                     57.6%        58.6% 
Hire                                       75.9%        78.8% 
-----------------------------------  -----------  ----------- 
Total gross margin                         59.8%        61.3% 
-----------------------------------  -----------  ----------- 
Administrative expenses                  (5,937)      (6,620) 
Shops' selling and marketing costs      (66,234)     (64,705) 
-----------------------------------  -----------  ----------- 
Operating profit                           6,655        7,077 
-----------------------------------  -----------  ----------- 
Other gains and losses                        21           26 
Investment revenues                           37           48 
Finance costs                                  -          (5) 
-----------------------------------  -----------  ----------- 
Profit before taxation                     6,713        7,146 
-----------------------------------  -----------  ----------- 
 

The accounting policies for the reportable segments are the same as the Group's accounting policies described in note 1 of the Annual Report.

   5.   Taxation 

Corporation tax is calculated at a blended rate of 19.16% (2016/17: a rate of 20% of the profit chargeable to taxation for the year.)

 
TAXATION RECOGNISED IN THE INCOME STATEMENT 
 IS AS FOLLOWS:                                2017/18   2016/17 
 GROUP - CONTINUING OPERATIONS                 GBP'000   GBP'000 
--------------------------------------------  --------  -------- 
Current tax charge 
 Current period                                  1,892     2,104 
Adjustment for prior periods                      (75)      (80) 
                                                 1,817     2,024 
--------------------------------------------  --------  -------- 
Deferred tax charge / (credit) 
 Current period                                  (362)     (406) 
Adjustment for prior periods                      (93)      (77) 
Effect of change in tax rate on opening 
 deferred tax balances                               -        82 
--------------------------------------------  --------  -------- 
                                                 (455)     (401) 
--------------------------------------------  --------  -------- 
Total taxation charge in the income 
 statement                                       1,362     1,623 
--------------------------------------------  --------  -------- 
 
FACTORS AFFECTING THE TAX CHARGE FOR 
 THE PERIOD                                    2017/18   2016/17 
 GROUP - CONTINUING OPERATIONS                 GBP'000   GBP'000 
--------------------------------------------  --------  -------- 
Profit on ordinary activities before 
 tax                                             6,713     7,146 
--------------------------------------------  --------  -------- 
Profit before tax multiplied by rate 
 of corporation tax in the UK of 19.16% 
 (2016/17: 20%)                                  1,286     1,429 
Income taxed at different rates in foreign 
 jurisdictions                                    (48)      (48) 
Depreciation on assets not qualifying 
 for capital allowances                            258       303 
Adjustments in respect to prior periods          (168)     (157) 
Impact on share based payments                      27         9 
Other permanent differences                       (47)         5 
Effect in the change of tax rate                    54        82 
Taxation charge for the period                   1,362     1,623 
--------------------------------------------  --------  -------- 
 
   6.    Earnings before interest, tax, depreciation and amortisation ("EBITDA") 

EBITDA as reported in the highlights summary on page 1 is calculated as follows:

 
                                       52 weeks      52 weeks 
                                             to            to 
                                     27 January    28 January 
                                           2018          2017 
---------------------------------  ------------  ------------ 
 Profit on ordinary activities 
  before tax                              6,713         7,146 
 Deduct: 
 Investment revenues                       (37)          (48) 
 Finance costs                                -             5 
 Add: 
 Depreciation of property, plant 
  and equipment                           5,720         5,905 
 Amortisation of intangible 
  assets                                    862           801 
 Amortisation of compulsory 
  purchase compensation                       -         (203) 
---------------------------------  ------------  ------------ 
 EBITDA*                                 13,258        13,606 
---------------------------------  ------------  ------------ 
 

* EBITDA is earnings before interest, tax, depreciation and amortisation.

This information is provided by RNS

The company news service from the London Stock Exchange

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