Online Mosaic in vogue
Shares in fashion retailer rally 30pc on back of positive trade update
SHARES in Mosaic Brands rallied more than 30 per cent after the fashion retailer became the latest consumer discretionary business to report flourishing sales in the lead-up to Christmas, aided by a booming online business that has also delivered better-than-expected profits.
It has helped Mosaic, one of the biggest fashion store owners in Australia with about 1300 stores trading under brands such as Noni B, Katies, Rivers, and Rockmans, return to the black after the bushfires and COVID-19 plunged it into multimillion-dollar losses in 2020 as its stores were shut.
And the good times are expected to continue in 2021 thanks to an accelerated rollout of COVID-19 vaccinations in Australia starting from as early as next month that is targeting older Australians, a core customer demographic of Mosaic’s leading fashion outlet Noni B.
“The accelerated vaccination program recently announced by the federal government should see the vast majority of our core customer base, and a large number of our frontline team, vaccinated by around the middle of the year,” Mosaic Brands CEO Scott Evans said.
Mosaic shares pounced on the upbeat forecast that pretax earnings were expected to be between $40m and $45m for the six months to December 27, materially exceeding market consensus and as much as 38 per cent better than for the previous first half.
The stock rocketed to close up 27.5c, or 31.25 per cent, at $1.155.
The fashion retailer has joined swelling ranks of consumer discretionary companies to release bullish trading updates following the Christmas trading season, including Solomon Lew’s Premier Investments, JB Hi-Fi, Shaver Shop and Super Retail Group.
For Mosaic and its shareholders it is a complete reversal of the worst weeks and months of 2020 in the peak of the pandemic when its stores were closed, a rental dispute with landlord Westfield had it briefly locked out of 129 of its stores and poor conditions and the impact of the bushfires triggered a full-year loss of $170m and a cancelled final dividend.
In its trading update, it said it had year-on-year online sales growth of 31 per cent.
“Mosaic saw its largest ever lift in online trading with Black Friday sales up 100 per cent on the previous year ... group-wide online sales were up 31 per cent on the previous corresponding period.”