Moss Bros Group plc (LON:MOSB) said it is "planning for an extremely challenging retail environment" as it confirmed all the bad news it warned of in a trading update just last week as it reported its full-year results.
The high street firm saw its pre-tax profits fall 6.1% to £6.7mln for the year ended 27 January 2018 as like-for-like sales growth slowed to 1.6%, compared to 5.3% growth the year before, with overall revenues up 3% to £131.8mln.
READ: Moss Bros shares plunge as it warns on 2018/2019 profit, cuts dividend for full-year 2017/18
The group's annual adjusted margins fell by 1.5% in the year to 59.8% from 61.3% due to a combination of rising input prices as a result of the weaker pound and the reduction of hire sales.
Moss Bros chief executive Brian Brick reiterated the group's pessimism for the current year, commenting: “Going forward, we are planning for an extremely challenging retail environment, not least because of the uncertain consumer environment and significant cost headwinds.”
He added: “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 group, as expected, proposed a reduced final dividend of 1.97p, down from 3.98p the year before, taking the full-year dividend down to 4p from 5.89p previously.
Shares in Moss Bros were down 0.5% at 46.5p in mid-morning trading, having slumped after last week's update.
Some sting taken out of the situation
Richard Hunter, head of markets at interactive investor, commented: “Last week’s profit warning may have taken some of the sting out of the situation, but Moss Bros is already facing an uphill struggle for the remainder of its trading year.”
He added; “The current investment environment takes no prisoners when negative news is announced and for retailers the reaction is even more severe, especially when accompanied by a dividend cut.”
Hunter continued: “The actual profit figure announced today is reasonable at £6.7 million versus the previous year’s £7.1 million, and revenues and sales were up during the period. E-commerce sales and a continued focus on costs are also likely to lessen the trading blow to a degree. In the new year, however, like for like sales have already dropped nearly 7% and, understandably, management guidance is heavily tinged with caution.
“A very limited market consensus points to the shares as a hold, but it remains to be seen whether investors will maintain patience or search elsewhere in the sector for a retailer which has rather less to contend with.”