Mosaic Brands to raise $32 million

After entering into a trading halt last week on the back of a return to profitability in FY21, the company behind fashion brands including Katies, Noni B, Autograph, Crossroads and Millers has announced a $32 million capital raise.

Mosaic Brands (ASX: MOZ) hopes the injection of capital will support the company until lockdown restrictions are eased and retail trade returns to normal.

“In FY21 Mosaic Brands delivered a considerable and successful reset of its overall business and experienced a re-emergence of positive retail trade,” Mosaic Brands says.

"As is the case across the majority of the retail sector, recent widespread lockdowns during the first two months of FY22 have disrupted Group momentum. Almost all stores across our entire portfolio experiencing restrictions or full lockdowns in some form during this period.

“Given the prolonged lockdown and subsequent impact on cash flow, the Offer is being conducted to provide Mosaic Brands with additional balance sheet support until lockdown measures are eased and stores are re-opened for trade.”

The capital will be raised is via the issue of $32 million of convertible notes comprising a $10 million strategic placement and a $22 million entitlement offer to existing shareholders.

Following completion of the raise, Mosaic expects to be well-funded through the current period of disrupted trading and will have pro forma cash of approximately $88.1 million.

Despite witnessing a decline in sales of 10 per cent in FY21, Mosaic managed to hit financial targets in line with previous forecasts with an EBITDA of $48 million compared to a $45 million loss in FY20.

Online sales grew by 19 per cent to $111.4 million and now also represent 19 per cent of total revenue. This was achieved partly thanks to an expanded retail offering, with the number of online offerings growing 10-fold to 1.5 million stock keeping units (SKUs).

Shares in MOZ are up 2.20 per cent to $0.46 per share at 1.39pm AEST.