TIDMMOSB
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
END
FR LLFSEVSIRFIT
(END) Dow Jones Newswires
March 27, 2018 02:00 ET (06:00 GMT)
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