Men's suits retailer Moss Bros is cutting its dividends for at least this after sales were hit by the ongoing UK high street gloom and short-term stock delivery issues.
Full year sales are expected to be lower as the decline in UK store footfall continued from the latter part of December was exacerbated for the company by a "material" reduced stock availability.
This stock issue has arisen following the consolidation of the supplier base management undertook in response to sterling's weakness in recent years, which has had the unexpected outcome of a stock shortfall across all categories, which in turn has had a negative effect on sales in all retail channels and is expected to last until late spring.
Directors said it was "important that we continue to increase our investment in key areas of future growth", especially ecommerce, product development, customer experience and the Tailor Me proposition, and so have taken what they say is a prudent approach to capital management.
The decision has been taken to cut the existing dividend policy to ensure that the company is able to fully cover future dividends with profits in the 2020/21 financial year and onwards. The board said they will therefore recommend a final dividend of 1.97p, resulting in a total annual dividend of 4p per share for the 2017/18 financial year, down from 5.89p the year before.
Chief executive Brian Brick said: "Although this has been a painful experience, I am confident that the availability issues are well on track to being resolved and the margin benefits from the consolidation will flow through. This stock shortage, has led to a disappointing start to the year and whilst we are still at a very early stage of our new financial year, the more cautious consumer environment and the effect of short term weather impacts, has led to a readjustment of our profit expectations, to protect the group's longer term investments.
"In common with many UK retailers, the year ahead looks like being a very challenging one and we have taken action early to be sure we protect the underlying strength of the business. We do believe continued investment is essential to ensure we retain a sustainable point of differentiation and that we leverage our distinct position on the high street."