FY 2007 Results for the period ended 27 January 2007
Statutory Sales up 43% to £585.8m - EBITDA up 22% to £72.2m
Rubicon Retail Ltd acquired for £182.3m
Highlights, on a statutory basis:
•Following the acquisition of Rubicon Retail during the year, total group sales
increased by 43%, to £585.8m (FY 2006: £410m).
•EBITDA, including Rubicon Retail from 13th October, was up 22% on last year to
£72.2m, (FY 2006: £59.2m) representing 12% of sales.
•Profit after tax for the year was £10.7m (FY 2006: £12.6m).
•Earnings per share were 0.369p, compared to 0.491p in FY 2006.
•Equity up by £21m to £150.6m (FY 2006: £129.6m)
Highlights, on a proforma basis:
•EBITDA of £92.5m in FY 2007, down 13% on last year (FY 2006: £106.3m)
representing 11% of sales. Total group sales increased by 5% in the year, to
£853.3m (FY 2006: £814.9m), including a 4% increase in the 4th Quarter.
•Coast, Karen Millen, Principles, Warehouse and Whistles delivered sales
growth, but there were sales declines at Oasis and Shoe Studio Group.
•International sales , across all brands, were up 28%, and now represent 15% of
group turnover (FY 2006: 12%).
•e-commerce sales amounted to £7.7m, a 253% increase on the previous year.
•During the year, a net 177 new stores and concessions were opened in the UK
and mainland Europe and 4 new stores were opened in the US, taking the owned
portfolio to 1629 stores. 48 international franchise stores were opened, taking
the franchise portfolio to 172.
There has been a slow start to 1st Quarter FY 2008, but low double digit growth
in proforma EBITDA is still expected for the year as a whole.
Derek Lovelock, CEO Mosaic Fashions, commented:
‘The UK market was very difficult this year, and all of our brands have been
affected to some extent by this. However, our strategy for long term growth by
integrating new brands, expanding internationally and developing e-commerce,
has progressed well.
At a more detailed level, a number of our brands performed more positively,
despite the unfavourable macroeconomic influences. Coast, Karen Millen,
Principles and Warehouse were stronger in the UK during the year, but Oasis,
Whistles and Shoe Studio Group disappointed. We have now strengthened the Oasis
and Whistles teams and both brands are showing evidence of recovery. In Shoe
Studio we are working with the team on strategy and supply chain issues and
remain confident of the company's potential.
Internationally the Group continues to grow strongly within new and existing
markets, both through our franchise partners and through company owned stores
and department store concessions.
e-commerce has also outperformed, particularly in Principles and Warehouse,
where after four years of on-line sales, innovative new web sites incorporating
the latest technology were launched in early 2006. These are producing
extraordinary growth. The Oasis website went live for the first time in
September 2006, on the same platform, and is performing strongly, Following the
launch of the Shoe Studio website in February 2007, we will roll out e-commerce
to the remaining brands later this year.'
CHIEF EXECUTIVE'S REVIEW
The last year has been a very exciting and challenging one for Mosaic, as the
Group completed the acquisition of the Rubicon Group and began to integrate it.
This has, at a stroke, doubled the Group's turnover and established Mosaic in
the top echelon of UK fashion retail.
As predicted, the UK market continued to be challenging and this year's results
partly reflect market conditions. Nonetheless, the past year has seen the
Group make good progress in delivering its long term strategy. We have
successfully completed the integration of Karen Millen and Whistles and I am
delighted to report that our Distribution Centre is now operating efficiently
and effectively under the leadership of its new Distribution Director.
International expansion has always been a key part of our strategy, in order to
reduce the group's dependency on its home market.
During the year we have not only built on our existing relationships but have
also taken measures to increase our global reach. In the last year Mosaic
opened 71 new international outlets and now has a presence in 34 countries.
Despite the excellent international expansion, maintaining our successful base
in the UK remains one of our top priorities. During the year our brands
achieved further growth in the UK, opening 31 UK solus stores and expanding our
concession portfolio with an additional 108 concessions opening.
During the year the Oasis management team was strengthened by the appointment
of Sharon O'Connor as Managing Director. We also appointed a new Merchandising
Director and Finance Director. The new senior management team have conducted a
thorough review of every element of the business and are implementing a
programme to reaffirm the brand's aspirational market positioning. Their
enthusiasm and determination is already apparent in the new season's ranges.
During the year we opened 4 solus stores and 15 concessions in the UK, mainly
in new retail developments.
Coast's stellar performance continued through the first half of the year at an
unprecedented rate. Inevitably as the year progressed, other fashion retailers
responded to Coast's success by introducing competing ranges of occasionwear.
This had the effect of slowing Coast's performance in the second half. The
Coast team is focussed on defending its dominant position in the market for
occasionwear through the introduction of more luxurious and desirable ranges
and improved service. To support this focus we opened a separate “Coast by
Appointment” floor in our Regent St flagship store. This floor caters
specifically for the needs of brides looking to purchase outfits for themselves
and their bridesmaids. This concept has been exceedingly well received and we
anticipate opening further salons where space allows in our city centre stores.
Over the year, Coast delivered a substantial increase in profits and opened 12
solus stores and 9 concessions in the UK.
Karen Millen delivered a strong all round performance. During the year the
range was extended to include separate collections of glamorous jetset
casualwear, confidence inducing workwear and a collection to provide the
perfect “occasion” outfit. All the collections come with a complete set of
accessories. Marketing and PR activities have been increased in an effort to
enhance global brand awareness. Growth has been achieved both internationally
and in the UK with 15 new stores and concessions opening, including a
spectacular flagship in Grafton St, the premier shopping street in Dublin.
The Whistles brand has had a difficult year and one that has required
significant effort from all involved to take advantage of the opportunity
afforded by the growth in the contemporary fashion market. I am confident that
the new team, headed by Amanda Burrows as Brand Director, will drive the brand
forward, as they have a strong vision of where the brand is going and how they
will build on its heritage, especially in designer knitwear. We are already
rolling out a new store concept which delivers this new proposition. We have
also reviewed our outlet strategy and have opened very successfully in upmarket
village locations such as Chiswick and Muswell Hill in London, which has
confirmed our confidence in the brand's new positioning.
The acquisition of the Rubicon brands occurred in October so it is appropriate
to comment on their performance in the final quarter. Warehouse had a very
strong final quarter after hitting the young fashion looks very strongly. The
team is focused and the brand has continued its strong performance into the new
financial year. Principles is an exciting addition to the Group, as it caters
for the fashion needs of slightly older women. The brand's mission, ‘making
sense of fashion' gives it a clear position in the contemporary market. After
a difficult Autumn, Principles had a very strong Christmas Sale and the new
Spring ranges have performed well.
Shoe Studio had a difficult Autumn due to the lack of seasonal weather. This
had a particularly adverse effect on sales of boots, however promotional
activity ensured that closing stocks were clean, enabling us to launch the
Spring range with conviction. As we learn more about Shoe Studio, we are
increasingly excited about the opportunity to extend our clothing brands. The
teams are already developing an inaugural range of shoes for Warehouse and
early discussions are taking place for the launch of Coast shoes and Karen
Millen shoes and bags, into selected department stores from Autumn 2007. In
addition, together with the new management of the House of Fraser department
store group, we have identified a number of prime locations on fashion floors
within their store portfolio, where we will jointly launch young fashion shoe
and accessories departments showcasing Bertie, Warehouse and Oasis in
particular.
Both Warehouse and Principles achieved excellent results from their
transactional websites in the final quarter of the year, with sales exceeding
all expectations. Oasis launched its e-commerce site in September and beat its
targets throughout the balance of the year. We plan to launch e-commerce sites
for the remainder of our brands through the year and are confident, given the
experience of our new brands in this area, that we have a significant
competitive advantage in this sector.
Current Trade
The new financial year has started slowly. Coast is still suffering from a
surfeit of occasionwear in the market, which has impacted our overall sales
performance for the first 12 weeks of the financial year. We are generally
pleased with the performance of the other brands, in particular Warehouse which
continues to deliver outstanding sales in both the High Street and through
e-commerce, and Whistles where there are clear indications that the brand is
resurgent.
The timing of Easter and the unusual weather patterns in the UK this year have
made it more difficult than usual to assess our performance at the start of the
spring/summer season, but despite mixed results across our portfolio of brands,
we remain confident of achieving low double digit growth in proforma EBITDA for
the year.
Derek Lovelock, CEO
26 April 2007
