Mosaic plans 40 new mega stores after network cull spurs profit turnaround

(Source: Millers website)

Mosaic Brands, the Australian apparel retail group, says it will open 40 new large-sized ‘mega stores’ this financial year as it transitions into what it describes as “a more ageless, value-driven, big-box retailer”.

The plans were revealed along with the group’s annual result which saw a $33.5 million turnaround from a loss of $16.4 million last year to EBITA of $17.1 million in the year to June 30. 

Mosaic Brands owns and operates apparel brands including Millers, Rockmans, Noni B, Rivers, Katies, Autograph, W Lane, Crossroads and Beme.

During the past year, Mosaic culled its store network by a net 148 outlets. With that taken into account, comparable store sales rose by 9.6 per cent, while absolute sales rose by 6 per cent. 

CEO Scott Evans said the company’s improved performance stems from management recognising that retail has “forever changed” with customer expectations shifting dramatically. The business realised that achieving a return to the pre-Covid era trading and profitability “required taking a leap forward rather than taking a step back”.

“This $33 million turnaround is not simply a result of customers returning to in-store shopping post the pandemic.”

A focus on e-commerce has seen online sales account for 20 per cent of group turnover in the latest financial year, with 4.4 million items shipped.

The group’s shift towards big-box retailing – and away from higher-rent, smaller-format stores had aided the turnaround and was the basis of what the retailer calls its ‘Big strategy’.

Mega stores are typically three times more profitable than standard-sized stores and those in shopping malls. The new ones in planning will be located largely in regional areas.

“Our Big strategy sees Mosaic Brands maintain and expand our core customer base, as seen in the Rivers brand, while drawing in an increasingly value-conscious cross-section of the community,” said Evans.

While bullish about the prospects offered by the new strategy, Evans expressed caution over the year ahead given “volatile” consumer sentiment and confidence. Sales in June and July were down as consumers faced higher interest rates, however, August’s figures were up 10 per cent year on year. 

Meanwhile, the company is completing the rollout of a new online platform which includes AI-driven customer analysis. The company said the transition might impact digital revenue in the short term, but the system will be operational prior to upcoming key trading periods. 

“Mosaic Brands has survived the pandemic-induced downturn and emerged as a more value-driven, operationally-lean, and strategically-focused organisation that has a clear vision as to where future growth opportunities in the retail landscape sit,” said Evans.

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