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Mosaic Brands poised for post-Covid recovery: CEO

Mosaic Brands’ CEO Scott Evans says frontline retail staff are crucial to success. Image: Supplied

Fashion firm Mosaic Brands has enjoyed a steady growth in sales since Easter, and is now expecting a full-year underlying EBITDA of $48 million for the 2021 financial year – assuming no further widespread lockdowns.

And after lowering its cost of doing business, as well as enjoying strong online sales, Mosaic is looking forward to another strong year in FY22, according to chief executive Scott Evans.

“We have reshaped our cost base, our inventory holding and remained focused on margin rather than chasing sales at any cost,” said Evans.

“[And], aligned with the vaccine roll-out, since Easter every week sees more and more of our customers heading back into store, [and], encouragingly, even with the gradual return to normalised shopping behaviour our online sales continue to perform well and grow.”

Mosaic Brands expects FY22 EBITDA to hit approximately $50 million, notwithstanding the loss of JobKeeper, and expects online to make up around 30 per cent of it’s total income due to the strength of its e-commerce offer – buoyed by EziBuy.

“Whilst some in the retail sector benefitted from the Covid-19 stimulus, Mosaic Brands faced a unique set of challenges due to our more Covid sensitive customer, which we are proud to say we have successfully navigated,” Evans said.

“We believe that as a national retailer who made … difficult changes early, Mosaic Brands has never been in a stronger position to take on the future.”

The fashion group, which manages Noni B, Millers, Rockmans, Katies, Rivers, Autograph, W. Lane, and Crossroads, saw revenue fall 18 per cent in the first half of the year to $359 million, though earnings before tax rose 38 per cent to $45.1 million.

This was done by shutting unprofitable stores and focusing on its online offer, which is now driving its recovery.

Mosaic pays $630,000 for breaching consumer law

During the period between March and June 2020, however, Mosaic sold a number of ‘Health Essential Products’ that were deemed to be falsely or misleadingly advertised by the ACCC.

Specifically, the ACCC put down five infringement notices related to advertising by Mosaic Brands which stated that:

  • Air Clean hand sanitiser sold on the NoniB website contained 70 per cent alcohol, when a sample tested by the ACCC was found to contain 17 per cent alcohol;
  • Miaoyue hand sanitiser sold by Millers contained 75 per cent alcohol, when a sample tested by the ACCC was found to contain 58 per cent alcohol;
  • Velcare-branded hand sanitiser products sold on its websites were ‘WHO-approved’, when they were not;
  • KN95 Kids Safety Face Masks sold on its websites were ‘CE/FDA certified’, when they were not; and
  • KN 95 Adult Face Masks were” non-refundable”, when in fact consumers have a statutory right to a refund under the consumer guarantee remedies.

Mosaic has admitted that advertising these products in such a misleading way was in breach of Australian Consumer Law and as paid penalties totaling $630,000.

“Businesses must never mislead their customers about the certification, quality or properties of their products, but we were particularly concerned about the representations by Mosaic Brands because the statements which Mosaic Brands has admitted were false or misleading related to certain protective health properties at the time of a global pandemic,” ACCC deputy chair Delia Rickard said.

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