Supermarkets hit Moss Bros profit

Despite the consumer downturn, sales of designer suits rose

Menswear firm Moss Bros has reported a pre-tax loss for 2007, hit by rising competition from supermarkets.

Moss Bros, the bid target of Icelandic investment group Baugur, said it made a pre-tax loss of £1.4m, compared to a profit of £5.1m in 2006.

It confirmed that talks with Baugur over its 42p-a-share takeover approach were continuing.

Due to the possibility of a takeover offer, Moss Bros said it would not pay a final dividend.

However, the retailer will pay a special dividend of 1.3 pence if the offer is withdrawn or lapses.

Last month it gave Baugur, which already owns a 29% stake, access to its books.

The company had previously warned that full-year profit would not meet analysts' expectations.

Going upmarket

It said that in the coming year it would be scrutinising all aspects of the business to prepare for "challenging" times and restructuring across operations will lead to job cuts.

The firm said it hoped to keep these to a minimum by not filling existent, vacant posts.

However the company has put aside £300,000 to account for redundancy costs.

It also plans to refocus its business on designer brands, including Hugo Boss and Canali, and move away from the lower-priced end of the market where cheaper suits from Tesco and Asda are taking market share.

As part of efforts to cut costs and maintain margins, Moss Bros said it is sourcing more products from China.