■ First-quarter like-for-like sales up 7.9 per cent
■ Ten more stores earmarked for modernisation in 2012-13
■ Continuing to run a surplus cash position
The impressive turnaround at suit specialist
As analyst John Stevenson at broker Peel Hunt points out, it's all the more noteworthy because, having reported underlying growth of 6 per cent in the first eight weeks, it marks an acceleration of growth in the last two months at a time when other retailers have complained about the negative effect of the wet weather.
However, while the current rate of sales growth is well ahead of the 4.5 per cent Mr Stevenson had expected, he's left his end of June 2013 EPS forecast of 1.3p unchanged as a result of the expected disruption to trading from this summer's Jubilee and sporting events. But, he says, initiatives such as the ongoing store refit programme and the scheduled launch of a new web platform later this year will help the company deliver material improvements in operating profit margins in the coming years, and it will also be able to capitalise on the short lease profile of its stores. He forecasts adjusted EPS of 2.2p in the year to June 2014.
We'd agree with Mr Stevenson's assessment of the scale of the potential profit growth at Moss Bros and, with net cash representing over half of the £40m market capitalisation, we rate the shares a buy at 43p.
Last IC view: Buy, 49p, 29 Mar 2012
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