Mosaic flags loss as stores reopen

The owner of fashion chains like Millers and Noni B will start reopening on May 11, as it cancels its dividend and forecasts a full-year loss.

Mosaic has conducted trial reopenings of its stores as retail gradually starts a return to trade. Picture: Scott Fletcher

Fashion retailer Mosaic Brands, whose chains include Millers, Rockmans, Noni B, Rivers, Katies, Autograph and W. Lane, says it will post a full-year loss for 2020 as a result of store closures and trading disruptions caused by the coronavirus pandemic.

However it says stores will begin to reopen from Monday after a successful trial, joining the likes of retailers such as Myer, Adairs and Kathmandu, which are also reopening.

Mosaic has also cancelled its deferred interim dividend, but has pledged a return to profit in 2021.

Its shares surged on the news, closing up 21.9 per cent on Thursday at 70c each.

The retailer also confirmed on Thursday that with its 1400 stores shut since late March, and 6800 staff stood down, the business had experienced a leap in online sales, which were up 80 per cent.

However, the boost in online sales would not be enough to counter lost traffic to its stores and deteriorating retail conditions caused by the health crisis.

Mosaic said with falling sales in March and the subsequent six-week closure of its stores, coupled with a progressive reopening and anticipated gradual recovery, Mosaic expects an EBITDA loss for the year to June 30. It expects the second half loss to exceed first half EBITDA of $32.7 million.

However, Mosaic management anticipates the pandemic’s impact on its performance to be short-term and expects a return to profit in 2021.

Mosaic will not declare an interim dividend for the half year to December 29, 2019 following its earlier deferral, pending clarification of the impact of COVID-19.

The retailer says it’s now on track to begin a reopening of its store network.

“As a result of trial openings over the past week, Mosaic is pleased to announce a progressive re- opening of its retail fashion stores over the coming months, commencing May 11, 2020,” the company said.

“As each store opens, it will adopt the company’s enhanced strict safety protocols that comply with all government directives, prioritising the health and safety of all team members, customers and the broader community.”

Mosaic said trial openings had provided an insight into changes in customer shopping habits, store revenues and shopping centre foot traffic, with landlord discussions to continue.

“Mosaic is discussing these insights with its landlords to ensure that, as stores re-open, appropriate commercial terms are agreed, consistent with the spirit and intention of the government’s mandatory code of conduct for commercial leasing arrangements and to ensure an appropriate sharing of risk and financial impact.”

Stores will only be reopened where satisfactory commercial terms are agreed with the landlord, Mosaic said.

“Mosaic is committed to working with its landlords to resume normal trading as soon as it is viable to do so and to provide a safe and improved shopping experience for customers.”