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Investors in Mosaic Brands (ASX: MOZ) have headed for the exits today with shares hitting an all-time low of 2.9 cents per share (cps), after the fashion retail group revealed it would be unable to lodge an audited FY24 annual report by the end of this month.
The loss-making group, known for such brands as Katies, Autograph, W. Lane, Noni B, Rivers and Millers, enacted safe harbour provisions in early August to allow for restructuring options to be explored with Deloitte advising on refinancing considerations.
The share price had already deteriorated since then, but after today's announcement that financial reports would be filed up to a month late by the end of September, and that MOZ share trading would be suspended from Monday, some investors opted not to wait and see what the next month will bring.
At the time of publication more than 2 million MOZ shares have been traded so far today, which is about 7.6 times greater than the daily average and the day's trading is far from over. Shares are currently down by almost 37 per cent.
"In the process of completing the results, the Group has determined that more time is needed to resolve a number of matters prior to finalisation of the results," the company said in today's announcement.
"During this period, Mosaic also intends to consult and work with all relevant stakeholders to accelerate a strategy to re-align its operations to be more reflective of current and anticipated market dynamics.
"The Group expects this consultation process to be undertaken as quickly as practically possible and currently anticipates that it will be able to provide an update to the market along with its FY24 annual results, by Monday 30 September 2024."
Despite achieving earnings before interest and tax (EBIT) of $13.1 million in the December half, in June Mosaic reported a loss was likely on the cards for the full-year due to the impacts from disruptions as it migrated to an integrated logistical supply chain and distribution system with a new global partner.
"The implementation disruptions experienced by Mosaic were greater than anticipated, delaying the delivery of inventory leading into the key Mother’s Day trading period," the company reported at the time.
"This, combined with softness in consumer spending, severely impacted revenue and earnings in the fourth quarter."
At the time Mosaic reported that even though it would be running at a loss for FY24, the issues that arose from moving to a new logistics model had been "largely resolved" and inventory was normalising across the group with improving comparable sales.
Before that announcement was made, MOZ shares were trading at 10cps, but they progressively declined with the negative FY24 outlook.
On 27 June, the pre-planned resignation of then chief financial officer and company secretary Luka Softa, who had been with the group for nearly a decade, came into effect, and he was replaced by former Nick Scali (ASX: NCK) CFO David Clarke.
Around a month later, the company reported net cash inflows of $6.6 million for the June quarter compared to net outflows of $19.8 million in the March quarter, and anticipated an EBIT loss for FY24 in the range of $15-20 million.
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