The retail group that owns Katies and Millers is making money again after closing unprofitable stores and massively increasing its online offering, flagging an ongoing sales lift as its older demographic customer base emerges from COVID-19 hibernation.
Mosaic Brands, which also owns Noni B, Rivers and Rockmans, booked a whopping $170 million full-year net loss in August but today posted a slim first-half net profit of $13m.
But that comes after it received almost $47m in JobKeeper benefits, which it said had been an “invaluable element” in managing through the past 10 months.
The group announced in October it had closed 73 stores in response to “unrealistic rental requests and a permanent shift towards online purchases”, saying it would potentially close up to 500 of its 1300-plus store portfolio nationally over the next year or two.
In its latest report, Mosaic said it closed 41 non-performing stores last month alone, bringing the total number of outlets shuttered so far to 123.
It also slashed stock levels by 55 per cent and increased its online offering by more than tenfold, from 25,000 products to more than 350,000.
That included expanding its online department store range – with chains like Rockmans now selling homewares such as bed linen – which now represents 17 per cent of total revenue.
It was already heading down that path before the pandemic, buying a controlling stake in catalogue-based fashion business EziBuy in 2019.
Mosaic said a turnaround plan for that investment continued to be executed.
Chief executive Scott Evans said the group had got through its toughest ever trading period and bolstered its finances, leaving it “reset” for a post-pandemic recovery.
“Given the unique demographic of our customers we did not see, nor expect, a short-term stimulus sugar hit to sales,” Mr Evans said.
“However, conversely we are now planning for a longer-term sustainable lift in sales due to post vaccine tailwinds, as many of those same customers emerge from hibernation.”
Mosaic said that in the short term, it expected to continue to operate in a “mask economy where customer sentiment can shift on a day-by-day basis” under lockdowns and health orders.
“As the vaccine rollout gets under way, we expect our customers will more confidently return to spend in-store, and shopping will resume as a social outing as opposed to a targeted mission,” Mr Evans said.
The group said improving sales had continued into January but would not provide an outlook for the second half, as the trading environment remained volatile, with more shutdowns a real possibility until the vaccination rollout was complete.
For the same reason, it hasn’t declared an interim dividend, saying it needs to keep preserving cash.