Clothing chain reports profit but expects sales to remain flat

MOSAIC FASHIONS Ireland, which includes the Oasis, Coast and Karen Millen women's fashion chains, expects sales to remain flat in the coming year as the retail market weakens.

Having expanded rapidly in Ireland in recent years, the company does not plan to add any new stores to its 130 outlets as its business has reached an "optimal level".

Mosaic's Irish operations had sales of £87.4 million (€110.4 million) in 2007, according to accounts filed in Britain. This represents a 52 per cent rise from £57.4 million in the previous year. The business is ultimately controlled by the Iceland-based Baugur empire.

Ian Galvin, chairman of Mosaic's Irish unit, conceded that the retail environment had "softened" this year due to the economic downturn. In addition to Oasis, Coast and Karen Millen, the company owns the Principles, Warehouse and Shoe Studio brands in Ireland.

"In 2005, 2006 and 2007 we reported sales increases of about 20 per cent nearly every year. It won't be like that this year; if we can hold the same figures for 2007 we will be very happy," Mr Galvin said.

He said the group had adjusted its strategy to deal with the downturn. "Unlike in previous years, we're not carrying stock anymore," he said.

"Every six weeks we now change stock and mark down any stock that hasn't already sold, which has helped us adjust to the new economic environment."

Mosaic Fashions Ireland has only just filed accounts for the year to January 2007 for Oasis, Coast and Karen Millen. This is the first time that the group has filed accounts for its Coast and Karen Millen chains in Ireland, which were incorporated here in January 2006.

The company previously published consolidated accounts for the three stores, but decided to file separate accounts after the acquisition in 2006 of Rubicon, which includes the Warehouse, Principles and Shoe Studio brands. Accounts for the other brands will be filed in October.

The individual accounts for Oasis, Coast and Karen Millen show that their combined earnings before interest tax depreciation and amortisation (Ebitda) in Ireland reached €11.2 million in the year to January 2007. Combined sales were €63.4 million. These three brands account for 56.5 per cent of Irish sales.

Oasis, the group's largest chain in Ireland, reported Ebitda of €4.4 million, up by 83 per cent on the previous year, and a 9 per cent increase in sales as turnover rose to €31.4 million from €28.7 million. Coast, the most profitable brand within the group in Ireland, reported Ebitda of €4.5 million and total sales of €18.9 million. Karen Millen reported profits of €2.3 million and sales of €13.1 million during the same period.