The group behind clothing brands Millers, Katies, Noni B and Rivers has announced it plans to close from 300 to 500 stores over the next two years.
In a statement posted to the stock exchange on Tuesday, Mosaic said its financial forecasts have been “utterly derailed”, first by the devastating bushfires which directly impacted 20 per cent of its store portfolio over the Christmas period, then by COVID-19 which saw it close all 1,333 stores for nine and a half weeks.
“There is no roadmap to navigate these circumstances, but our operational priorities have been ensuring team and customer safety, reducing inventory and maintaining a strong cash position,” said Mosaic Brands’ managing director and CEO, Scott Evans.
“This has allowed us to reshape Mosaic to take advantage of the fundamental changes happening in retail.”
Mosaic hinted that a number of its stores could close by the end of the year, with 41 per cent of current leases either on holdover or expiring by December 2020, and approximately 87 per cent of the group’s 1,333 stores expiring over the next two years.
Mr Evans also appeared to take a swipe at landlords, some of whom, he said, have not accepted the changed reality.
“The retail rental market in Australia is not paused because of the pandemic — it is fundamentally changed for the future. Some, though, not all, landlords accept that reality,” Mr Evans said.
A number of Mosaic stores in Westfield shopping centres have been involuntarily closed after the chain’s parent company Scentre Group decided to lock all retailers on reduced rent in a rent dispute.
Mosaic announced that 400 of its employees have been impacted from a total 129 stores.
“These actions are extremely disappointing, given the current environment, and difficult to comprehend in the context of a relationship that spans close to 40 years,” Richard Facioni, Mosaic chairman, said at the time.
“Mosaic continues to conduct rental negotiations in good faith with all landlords, including Scentre Group, in the spirit of sharing the burden of the impact of the COVID-19 crisis, consistent with government recommendations.”
Looking ahead at the future, Mr Facioni said in the statement on Tuesday that Mosaic is well positioned to return to sustainable profitability in FY21, subject to no further material disruptions to operations due to COVID-19.