Mosaic Brands grew EBITDA and net profit for the first half of FY20 despite a drop in revenue and the widely felt impact of the disastrous bushfire season.

Net profit for the half rose 47.5 per cent to $14.1 million for the six months to 29 December, while EBITDA rose 36 per cent to $32 million. And while revenue fell 10.9 per cent to $413.8 million, this was offset by a rise in gross margin from 57 per cent to 60 per cent due to a decision to stop chasing discounts across its range. 

Mosaic Brands managing director and chief executive Scott Evans said the business was pleased with the overall result but that the impact of the bushfires weighed heavily on the half, with Mosaic unable to reach the approximaltely $40 million EBITDA it was chasing.

The business saw 276 stores directly impacted, with Noni B, W.Lane, and Millers more heavily impacted than other brands. Rivers was impacted the least said Evans, due to its focus on younger staff and diversification into menswear. 

Online reached 10.1 per cent of total sales for the half, up on 9 per cent this time last year. Evans said the business was instituting a “department store style” model across its online stores, allowing other brands outside of its core range, such as homewares and beauty, to sell in a dropship model.

According to the business, fashion makes up about 27 per cent of its online sales, homewares and appliances make up 11.5 per cent, and beauty makes up 8.4 per cent. 

Mosaic acquired EziBuy during November – an acquisition that isn’t reflected in its financials for this half but is designed to fast track its digital strategy and online sales to approximately $200 million. This would boost online sales to make up 20 per cent of total sales. 

While Evans was pleased that the direct impact of the bushfires was over, like many retailers Mosaic is now grappling with the uncertainty created by the COVID-19 virus. 

Mosaic saw a 2 week delay on stock from China recently, and is trying to understand the potential further impact moving forward – with items in production now for April at risk of being delayed or cancelled before it can reach Australia. 

Due to this uncertainty the Mosaic board refrained from declaring an interim dividend, noting it is likely to face further disruptions during the second half.