Mosaic Brands, which owns Katies, Rockmans and Noni B, books bumper online sales, shares climb

The retailer behind Katies, Rockmans and Noni B has recorded a surge of online sales and says it is on track to report higher-than-expected first-half earnings.

Shares rally in retailer Mosaic Brands, which owns Millers, Katies and Noni B, following bullish online sales trading with earnings set to top forecasts. Picture: Steven Saphore/NCA NewsWire

The retailer behind Katies, Rockmans and Noni B has recorded a surge of online sales and says it is on track to report higher-than-expected first-half earnings.

“Across the group we have lost just under 50,000 store trading days during this half through complying with Covid-related health orders or deciding independently to close stores for the health and safety of our team and customers,” Mosaic Brands chief executive Scott Evans said.

“That was more than double the trading days lost for the same period a year ago.”

Despite this, sales in the first half of the financial year rose 1 per cent compared to the six months to the end of 2020, and the company will report revenues of $298m for the period. Earnings of about $8m were expected, 16 per cent above equity analysts forecasts, Mosaic said.

The positive result was underpinned by a 21 per cent rise in online sales to $119m, Mr Evans said.

Online shopping now makes up around 40 per cent of the company’s total sales.

“This latest result further highlights the global trend of the over-50s consumer embracing the online channel,” he said.

“This is further echoed as we move to completing the full ownership and turnaround of EziBuy, with its online sales also up 10.6 per cent for the period.”

Mosaic acquired a majority stake in EziBuy in 2019 for just $1 and then purchased the remaining 49.9 per cent of the online retailer in October last year for about $11m. EziBuy, based in Auckland, sells clothes, gifts and homewares online and through its catalogue business.

A note on the update released on Thursday said “ASX has asked that the previous shareholder approval for the EziBuy acquisition be refreshed”.

Further details will be set out in the notice of meeting to be distributed in the coming weeks.

“Although the rapid spread of the new Omicron variant is currently impacting centre traffic, the reset and stock planning we’ve undertaken across the entire business means we’re well positioned and prepared to weather this latest wave,” said Mr Evans.

Retailers are bracing for a hit from weak consumer sentiment, although there have been mixed signals from economists.

Chris Read, a Morgan Stanley equities strategist, said in a note to clients that while consumer sentiment had fallen by 2 per cent in January, it was in line with its long-run average. “In our view this is a relatively resilient result given the sharp increase in Covid cases that have occurred through the month,” he wrote.

“Sentiment around current conditions generally improved in the month, but this was offset by near-term expectations declining – for both the economy and own family finances.

“Spending intentions ticked up in the month, but are still well below average levels.”

But, in data released on Thursday, CBA economists said spending intentions had risen 2.5 per cent to 115 on its index for December, the highest level since the series commenced in 2017.

“December is generally a seasonally strong time for retail due to Christmas shopping,” said senior economist Belinda Allen.

“However, this was compounded by the fact that December 2021 marked the end of restrictions post-Delta and there was accumulated household savings, which led to a strong surge in spending.”

“The Omicron variant, which has led to a surge in Covid-19 cases late in December and into January, is an important development to watch. It is impacting the demand and supply side of the Australian economy.

“We can see from our high frequency credit and debit card data there does appear to be a fall in spending in January, with spending on services more impacted than goods spending.”