Buyers for Moss Bros still hard to find

Last week’s profit warning may have taken some of the sting out of the situation, but Moss Bros (MOSB) is already facing an uphill struggle for the remainder of its trading year.

There has certainly not been a shortage of stock with regard to the shares, where buyers have been hard to find as the price searches for a level. Having dropped 53% over the last six months and 33% over the last month alone, these are torrid times for a previously well-regarded stock.

The current investment environment takes no prisoners when negative news is announced and for retailers the reaction is even more severe, especially when accompanied by a dividend cut.

Given the price collapse, the projected yield of 10% is slightly misleading and the dividend is barely covered.

Source: interactive investor                Past performance is not a guide to future performance

The actual profit figure, announced today, is reasonable at £6.7 million versus the previous year’s £7.1 million, and revenues and sales were up during the period. E-commerce sales and a continued focus on costs are also likely to lessen the trading blow to a degree.

In the new year, however, like for like sales have already dropped nearly 7% and, understandably, management guidance is heavily tinged with caution.

A very limited market consensus points to the shares as a ‘hold’, but it remains to be seen whether investors will maintain patience or search elsewhere in the sector for a retailer which has rather less to contend with.

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