Following on from the difficult trading conditions the retail industry has found itself in, Mosaic Brands has seen FY20 finish up with a loss of $212 million.
The result was driven by store closures during the Christmas bushfires and the Covid-19 pandemic, which lined up with Mother’s Day, as well as impairments against the brand.
“[Our] forecast was utterly derailed,” said Mosaic chief executive Scott Evans.
And, as a result of the business’ efforts to distance itself from long-term leases, with around 87 per cent of its leases ending in the next two years, Mosaic is expecting to close between 300 and 500 store locations over that period.
These stores closures could impact any of Mosaic Brands, which include Noni B, Millers, Rockmans, Katies, Rivers, Autograph, W. Lane, and Crossroads.
“The retail rental market in Australia is not paused because of the pandemic – it is fundamentally changed for the future. Some, though not all, landlords accept that reality,” Evans said.
“Shuttered stores work for no one so we aim to minimise closures, but not on uncommercial terms.
“The 300 or 500 will be based on the terms of the landlord and what we think the future sales in those locations will be. If we can’t agree, and in a period of time the landlord wants us back and gives us the deal that we think would be right … then we would reopen them.”
Evans’ comments come a week after the business saw 129 of its stores closed by Westfield-operator Scentre Group as a result of rent negotiations.
Mosaic confirmed it is in negotiations with Scentre Group in order to reopen these stores, though wouldn’t commit to a timeframe for when this could occur.
“There is no roadmap to navigate these circumstances, but our operational priorities have been ensuring team and customer safety, reducing inventory and maintaining a strong cash position,” Evans said.
“This has allowed us to reshape Mosaic to take advantage of the fundamental changes happening in retail.”
One such change is the enormous growth in online sales delivered by the pandemic, with Mosaic’s digital sales up 14.7 per cent year-on-year to $93.7 million.
Evans told investors that the business expects online sales to continue to be very strong for the foreseeable future.
“We believe that what Covid’s done is take the next three to five years [of online growth] and make it happen in three to six months,” Evans said.
“And in addition to that we’re very aggressive about the additional categories and SKUs that we’re offering.”