The ASX-listed company responsible for fashion retail brands such as W.Lane and Rockmans bounced back in FY21 with expectations the group will deliver underlying earnings of $48 million, but it has withdrawn previous bullish guidance for FY22.
This latest result represents a complete swing of the pendulum for Mosaic Brands (ASX: MOZ), which recorded a $45.8 million loss in FY20 due to the impacts of bushfires and COVID-induced lockdowns.
That swing is almost equivalent to the $96.87 million in government grants and tax incentives received over the 12-month period, although the company received around $31 million in government support in FY20 as well.
The Sydney-based group - which also owns Noni B, Katies, Millers, Rivers, Autograph and Crossroads - has not reported how much JobKeeper it received in FY21, but does note that EBITDA includes the wage subsidy scheme.
Profit margin rose by almost 12 percentage points to 59.4 per cent - a record for Mosaic, which saw its online sales growth accelerate as well to 19 per cent with the channel now representing almost a fifth of sales at $111 million.
The market responded positively to the news today with MOZ shares up 10.4 per cent at $0.53 each at 2:39pm AEST, even though it had backed out of previous forecasts of $50 million underlying EBITDA.
"The renewal of lockdowns nationwide, subsequent store closures and dampening of consumer confidence throughout the July period has impacted all retailers including Mosaic Brands," the company reported today.
"Due to the severity and unknown length of the current lockdowns, the group no longer considers it appropriate to provide guidance for FY22 (this guidance previously having been provided subject to no further lockdowns).
"The company has also, as it has previously done, taken decisive steps to ensure team and customer safety as well as cost and inventory management given the uncertain duration of the lockdowns."
Despite the impacts of lockdowns, Mosaic has entered FY22 with "solid momentum" and continued digital online department store revenue growth sitting at 13.3 per cent in the year to date.
"However, the severe recent and ongoing lockdowns have impacted in store sales in the short term," the group said.
"Once lockdowns cease and the vaccine roll-out advances, Mosaic Brands will be well positioned to come out of the current environment strongly, as evidenced in Q4 trading, and return to sustainable profitability."
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