Moss Bros faces 'competitive trading environment' amid wage rises and weak pound
Men's suit retailer Moss Bros has said it is preparing for a tough year ahead as the collapse of the pound adds to "significant" cost pressures.
It said the national living wage increase and the apprenticeship levy as well as the "combined effects of a devalued pound" would weigh on the sector, which already faced "one of the most highly competitive" trading environments in recent history last year.
The group said: "The retail landscape in 2017 will undoubtedly be tough, with an uncertain consumer environment set against the wider political backdrop and alongside rising costs of operation and a weaker pound.
"We continue to anticipate and prepare for a more competitive trading environment."
Sterling has lost 16% of its value against the US dollar and fallen 12% versus the euro since the Brexit vote in June.
The currency's collapse has raised the cost of imports for UK businesses, which is starting to feed through to consumer prices.
Experts are now forecasting a squeeze on household incomes as a result of rising inflation, which hit 2.3% in February, raising concerns over a slowdown in consumer spending.
But Moss Bros said its trading performance was in line with board expectations and added that early reaction to its spring and summer range has been "positive".
The retailer reported pre-tax profits soaring 20.3% to £7.1 million in the year to January 28.
It notched up a 5.7% rise in total group revenue - excluding VAT - to £127.9 million, while like-for-like sales climbed 5.3% to £131.5 million.
Mobile and tablet sales growth was "strong", accounting for 43% of online sales.
Overall, revenues from e-commerce - including VAT - jumped 15.7%, making up 11% of total sales.
That is up from 10% in 2015.
Chairman Debbie Hewitt said: "The retail environment became one of the most highly competitive we have seen for some considerable time, with heavy and intense discounting.
"We ... traded our way through what was an unforgiving market, which saw a number of new branded entrants to the menswear market and the exit or reduction in market share for a couple of long established brands."
She said Moss Bros now plans to "accelerate" the revamp of its suit-for-hire business and continue to build up both its digital and bricks-and-mortar stores, which comprise its "multi-channel" strategy.
"This will be done in the context of significant external cost pressures," she said.