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Fashion retailer Mosaic Brands (ASX: MOZ) is exiting five of its brands including Rockmans, Autograph and W.Lane with the closure of more than 200 stores as the company looks to stem its financial losses and keep the business afloat.
The company, which currently operates nine brands comprising about 700 stores across Australia and New Zealand, also plans to wind down its pure-play digital platforms Crossroads and BeMe in a move to further shed “non-core” business assets.
Mosaic Brands instead will focus on the remainder of its portfolio which comprises Millers, Noni B, Rivers and Katies, in addition to its standalone online Mosaic marketplace.
The planned store closures will further decimate the Mosaic Brands store footprint to less than 500 – or a third of the company’s outlets a decade ago – after hundreds of store closures during and following the COVID-19 pandemic.
Between them, Rockmans, Autograph and W.Lane comprise about 220 group stores with the closures set to affect hundreds of jobs.
Mosaic CEO Erica Berchtold says the closures are aimed at rationalising the Mosaic brand portfolio in order to simplify the business.
“Mosaic will wind down five brands which have become marginal and non-core, allowing us to focus on five core growth brands,” says Berchtold.
“Each of those core brands will have a clearly differentiated market proposition, target customer, price point and product range.
“As part of the Focus on Core plan, Mosaic will exit the Rockmans, Autograph, Crossroads, W.Lane and BeMe brands, including all stores and websites.
“The group will now capitalise on and invest in its Millers, Noni B, Rivers and Katies brands, along with a standalone online Mosaic marketplace.”
The store closures come on the heels of Mosaic Brands announcing in August that its board had enacted safe harbour provisions of corporate law which allow the board to address financial distress on the company behind the scenes without the need to notify the market.
“Whilst the operational details of the rationalisation plan, including store closures, continue to be worked through, we will seek to minimise the impact on our team, including where possible reassigning impacted team members into roles within the five core brands,” says Berchtold.
“Our Focus on Core is a growth-driven strategy to retain existing customers and attract new ones. Central to this strategy, Mosaic will continue to focus on servicing regional Australia.”
The store closures have been announced ahead of the company’s FY24 earnings results being released.
In July, Mosaic Brands indicated it was expecting to post an operating EBITDA loss of between $5 million and $10 million in FY24 and an EBIT loss ranging from $15 million to $20 million.
While the release of its earnings results has taken longer than expected, Mosaic Brands says the delay is due to events after the reporting period “which will impact the disclosures accompanying the audited results”.
Mosaic Brands shares hit an all-time low of 2.9c on 30 August after the fashion retail group revealed it would be unable to lodge an audited FY24 annual report by the end of the month.
The shares were suspended by the ASX on 2 September after the company failed to lodge its earnings results by the end of August.
The shares are expected to resume trading following the release of Mosaic Brands' latest full-year earnings.
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