The owners behind some of Australia’s largest fashion brands have reported strong trading results for the December half, with Accent Group (ASX: AX1) and Mosaic Group (ASX: MOZ) both enjoying a sales boom over the holiday season.
Accent Group announced sales rose by 39 per cent year-on-year to reach $825 million, although the rise would have only been 33 per cent if it weren't for an additional trading week.
That extra week brought in an additional $10 million, which is a hefty chunk of the $90 million to $92 million expected in EBIT for the first half.
Accent Group’s shares surged by 11 per cent this morning off the back of the news which comes one week after retailers JB Hi-Fi (ASX: JBH) and Super Retail Group (ASX: SUL) also had successful promotional periods over the festive season.
The positive results are in stark comparison to struggling plus-size fashion retailer City Chic, which is anticipating a loss of $2.5 million to $4 million in the December half after revenue slumped through key sales events.
Accent Group also noted that trading in January has been in line with expectations, including a continued recovery against softer trade last year.
“Trading conditions in November and December continued to be very positive and were consistent across Accent Group’s retail and wholesale banners. Deliveries of fresh new product throughout H1 and in the lead up to Christmas helped to drive higher than expected sales,” Accent Group CEO Daniel Agostinelli said.
“Despite the impact of currency and clearance of discontinued brands, we are pleased with the year-on-year improvement in gross margin.
“Overall, inventory levels are clean and well positioned for the start of H2, reflecting a strong in-stock position in core lines and early deliveries of wholesale product for H2 sales.”
Another Australian retailer enjoying a boom in sales is Mosaic Brands (ASX: MOZ), which saw earnings double year-on-year to hit $15.8 million. Its sales growth was not quite as pronounced as Accent Group, sitting at 23 per cent.
The apparel retailer, whose portfolio includes Noni B, Katie’s and Millers, also revealed it will roll out 130 new stores throughout 2023 and expects to see its online segment reach up to eight million products by the end of the year.
While the company is yet to hit pre-pandemic levels of in-store shopping, Mosaic Group CEO Scott Evans said the number is continuing to lift on a month-to-month basis, with customers also spending more on an average transaction basis.
Pure-play online retailer EziBuy - which Mosaic purchased a 49.9 per cent stake in two years ago - saw sales decline by 51 per cent, but the group noted it expected trading to improve late in the second half as operational improvements were introduced.
“Consistent with our last update in November, Mosaic’s trading rebound continues to gain momentum as customers increasingly return to instore shopping, following three years heavily impacted by COVID,” said Evans.
“While not yet at pre-pandemic levels, in-store shopping continues to lift on a month-by-month basis, with customers also spending more on an average transaction basis.
“This result highlights how Mosaic has changed enormously to not only come out the other side of COVID, but to become a stronger and more sustainable business in what is a very different retail environment from just three years ago.”
Mosaic appoints new director
In conjunction with the trading update, Mosaic Brands also announced that Spotlight Retail CEO Quentin Gracanin would be joining the group’s board as a non-executive director from 22 February 2023.
Gracanin has been the CEO and a board member at the privately-owned Spotlight Retail for 12 of his 30 years in the retail sector.
“Spotlight was a significant supporter of Mosaic’s 2021 capital raise in the depths of managing COVID,” said Mosaic chairman Richard Facioni.
“As the turnaround of the group accelerates, Quentin brings an extensive understanding of retail operations to add to the board’s existing expertise.
“We welcome Quentin to the Board and look forward to working closely with Spotlight, one of Australia leading retailers, and Quentin to enhance shareholder value.”
Shares in MOZ are up 3.5 per cent at 30 cents each at 11:55am AEDT.
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