Men's tailoring specialist Moss Bros (MOSB) has issued a better-than-expected first quarter update, highlighting strong retail sales and positive growth from its suit hire business over the 15 weeks to 14 May.

With Moss Bros firmly in growth mode and clearly grabbing market share, CEO Brian Brick expresses confidence in meeting annual profit expectations, triggering a 3% share price gain to 104p.

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Whereas rival clothing retailers are struggling in a tougher apparel industry, today's AGM update from the self-styled 'first choice in men's tailoring' reveals strong trading across the board, building on the positive trends witnessed last year.

Moss' like-for-like retail sales, including e-commerce, grew 5.1% over the opening 15 weeks, new season's ranges performing well and the men's suit specialist reaping the benefits of store refurbishments. Brick, the man behind the quintessentially British brand's financial revitalisation, also reports 4.7% growth in like-for-like hire sales as an encouraging trend for 2016 bookings continues.


One of today's key takeaways is the news retail gross margins improved by 430 basis points year-on-year, as the combination of improved sell-through rates and higher online conversion rates helped mitigate the need for a mid-season sale.

Significantly, recent investments behind the retail and hire websites helped to drive web-based sales up 9.7%; total e-commerce revenues spoke for 10.7% of the top-line total, up from 10% year-on-year.

Liberum Capital remains bullish on the stock, though holds its numbers for now since it is early in the year and the broker is mindful the Euro football tournament could prove a distraction over the summer.

'While we leave forecasts unchanged, we believe these gross margin gains and the strong like-for-like sales can be delivered over the course of the year as a whole,' the broker writes. 'We remain confident that the group's refurbished estate, clear branded offer and price architecture are resulting in market share gains. The growth profile for Moss is strong with a 13% 5-year EPS CAGR (compound annual growth rate) and a dividend yield of 6%, all combining to make Moss Bros a strong core Buy in our retail coverage.'


Over at Cantor Fitzgerald Europe, well-followed retail scribe Freddie George reiterates his 'buy' rating and 120p price target. 'This update shows that the company is very much in a growth phase and supports our view that the stock is undervalued,' writes George. The consumer sector sage also points out Moss Bros' earnings have doubled in the last three years, yet are still 'forecast to grow by between 15% and 20% per annum' and flags a strong balance sheet with cash reported at £17 million at January 2016.

Issue Date: 20 May 2016