By Emma Koehn
The boss of Rivers and Katies operator Mosaic Brands says the fashion retailer is well placed to weather the storm of cost of living pressures as the group’s core customer base is still spending.
Mosaic shares accelerated by more than 50 per cent during Friday’s session and closed 19 per cent stronger after the company confirmed it was set to swing back to profit for 2023 after posting a $16 million earnings loss last year.
Mosaic Brands labels, including Noni B and Rivers, were heavily affected by COVID-19 closures and a slow return of its core customers to the shops.
Chief executive Scott Evans said while the business had been hit hard over the past few years as foot traffic to stores evaporated thanks to COVID-19, the company’s core customer base was not the most exposed to cost pressures in the current environment.
“It [COVID-19] played out for us pretty badly over the past few years, but as you come out of that and into a high-rate environment, many [of our customers] have little mortgages, or no mortgages,” he said.
Evans said there was no doubt that spending was slowing, but soaring business costs seen in the COVID era had also started to decline.
“Do we think that the next six months is going to be all wonderful? No. Do we think it’s Armageddon? Not quite,” he said.
‘Clearly, over-50 consumers have become more cautious in the last six months, but they are still spending.’
Scott Evans, Mosaic Brands chief executive
Mosaic Brands told investors in its market update on Friday that while rising interest rates had affected consumer appetite, the shoppers who typically frequent the company’s brands were continuing to spend online and in-store.
“Clearly, over-50 consumers have become more cautious in the last six months, but they are still
spending,” Evans said.
Falling consumer confidence readings and slowing retail turnover figures have led analysts to approach the retail sector’s August earnings season with a high degree of caution.
Trading updates from several companies, including Harvey Norman, Universal Store, Best and Less and Baby Bunting over the past two months have pointed to softening conditions.
There are some signs that conditions are not as bad as had been feared, however. Jeweller Michael Hill International told investors last week that while economic conditions had been challenging, its second-half sales had improved to just 0.8 per cent weaker than last year. The company’s shares gained 1 per cent on Friday.
May’s retail sales figures showed a surprise bump in turnover of 0.7 per cent across the nation as consumers took advantage of mid-season sales events.
Consumer stocks have also been resilient despite the bearish outlook for spending, with the S&P/ASX200 consumer discretionary index ahead by 9.4 per cent since January.
While there could be bright spots this earnings season, recent parcels data suggests retailers are no doubt grappling with shoppers who are more reluctant to spend.
A quarterly shopping report from Australia Post last week showed online spend was down by 3.1 per cent on last year, even as more households regularly shopped online, in a sign that wallets were tightening.
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