Mosaic Fashion Group (listed as ASX:MOZ but probably not for much longer) is a conglomerate of retail fashion store chains. All but one of the chains is aimed at women. The exception is Rivers (130 stores as of the 2023 annual report), which was founded to produce country style wear for both sexes. That, we'll leave as a story for another time.
Some of the store brands like Katies used to be squarely targeted at a young market... back when those who were born in the '60s and '70s were young. It and its 98 remaining stores have aged along with the customers. Katies is probably aiming at 50s and above now as its core market, despite the annual reports continuing to show late teen / early 20s models on each of the brand pages.
Other brands in the group include Noni B (136 stores and the original chain in the group; "special occasion" clothes), Millers (209 stores; "value, quality and ageless fashion", so... there's a clearly targeted demographic there for sure, {/sarcasm}), W Lane (32 stores; focusing on natural fibres), Rockmans (150 stores; "diverse prints and chic styles"), Autograph (49 stores; "embracing curves with a signature style"), as well as theoretically online only brands Be Me (larger sizes), Liz Jordan (a more up market Noni B), crossroads ("on trend outfits for all occasions"), Rsports (sports brands like Nike and Adidas, but I'd never heard of it before reading the annual report) and, FR Jewellery (ditto). I say "theoretically" because some of the online brands appeared prominently on the signage of some of their "combined brand" physical stores. I make that 804 surviving physical stores, but as I said some seem to be co-branded (like this one) so I don't know if there was double counting.
The annual report for 2023 had pretty charts at the front showing Excellent! Performance! Profit steadily grew from 2016 to 2019. Covid tanked poor 2020 but hey, 2021 made it up. There was another smaller loss in 2022 but again, 2023 to the rescue! So the company has been treading water this decade, but... oh, wait. That chart is EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), a measure that the late and lamented Charlie Munger described as "bulls**t" because it pretends that some very real expenses don't exist. When you look at the full financial report down the back, the one that has numbers rather than pretty charts, you see the real, ugly, warts and all story. (And oh so many warts...)
The real profit was $266K on continuing operations (from sales of $495 million), plus $971K from discontinued operations (so, that won't happen again). Granted there was a $2.88 million impairment cost on the brands' value which is subjective (or was, maybe not now), but what's not subjective is the negative cashflow of almost $31 million for the year, double the outflow in 2022. And the end of year cash balance was way, way less than that.
Also not subjective is the fact that the net equity in the business was NEGATIVE $66.085 million. This was admittedly an improvement over the negative $84.8 million the previous year, but try this maths quiz. "If Timmy has negative equity of 66 million and clears $266 grand a year, how many years to the nearest century will it take him to dig himself out of that hole?"
By September 2024 the group announced that they were junking the Rockmans, Autograph, Crossroads, W Lane, and BeMe labels. 200 stores were slated to close... which explains why nobody bothered to fix these signs. The new CEO declared that the remaining core brands would be targeted at clearly differentiated customers with different rages of stock, which I think was a good idea given the vagueness described above.
However financial reality hit before she could implement her plan. In late October the group went into official administration (which is a type of insolvency protection). By December the receivers announced that the entire Katies brand was toast too, as well as a further 80 stores in Millers, Rivers and Noni B.
There will be knock on effects. A lot of retail jobs in local communities will vaporise. Corrimal Village, which already has 4 of its shops vacant can add another one, at least. (Possibly more. There is also a Noni B and a Millers store in the centre, and I don't know whether one or both will be for the chop.) I've seen the centre open one, just one new store in the last couple of years. With Woolworths being the anchor tenant I doubt the centre will go under any time soon, but I'm not sure how bright the future is either.
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Edit 23 Jan 25: Well, there goes another institution:
"Clothing and footwear brand Rivers will close all of its 136 stores across the country by mid-April, resulting in 650 job losses after the receivers and managers for parent company Mosaic Brands failed to find a buyer."
